The temple, along with 300 residential dwellings, had been proposed at Comberton Grange, south of Nowra about 18 months ago.
Councillor Watson blames a lack of action by the New South Wales' planning department for the project not going ahead.
"The (NSW) premier was very enthusiastic, we met with the premier, he was over the moon," he said.
"But the Department of Planning had other ideas.
"As far as I'm concerned, they set a process which was impossibile to get it across the line in that form."
