The Tourism Ministry has instructed the Malta Tourism Authority to terminate an €80,000-a-year consultancy contract awarded to former minister Konrad Mizzi last month.
The contract was revealed by Times of Malta on Monday evening and the government on Tuesday said it was seeking legal advice about its validity.
Dr Mizzi signed the contract just two weeks after he was forced out of Cabinet, as a result of fallout from the Daphne Caruana Galizia murder investigation.
On Tuesday evening the ministry said that on the basis of that legal advice, it had instructed the Malta Tourism Authority to terminate the contract immediately.
Tourism Minister Julia Farrugia Portelli also announced the decision on social media.
"I gave instructions to the authority to terminate this contract with immediate effect," she wrote on Facebook, saying she had acted on legal advice.
"At this stage I can confirm that no payments related to this contract were ever made," she added.
Earlier on Tuesday afternoon, the Opposition called on the Public Accounts Committee to consider the contract.
Opposition leader Adrian Delia and the shadow minister for tourism, Robert Arrigo, wrote to the chairman of the Public Accounts Committee saying the committee should determine whether financial rules had been followed, whether the board of the MTA had known about the deal and whether the go-ahead of the finance minister was sought.
They pointed out that in terms of the Tourism Services Act the MTA could not accrue any expenses which were not authorised by parliament.
This, the Opposition said, was an obscene contract which needed to be terminated immediately.
Former Prime Minister Joseph Muscat was questioned about the deal as he entered parliament on Tuesday, but did not comment.