KiwiRail has begun discussions to cancel a $555 million contract for an overseas firm to build it two new Cook Strait ferries.

Late last year the Government rejected a plea for extra funding on the project to buy two new ferries and upgrade two ports.

KiwiRail says it can't proceed without the Government funding and is now officially moving to terminate a contract with Hyundai Mipo Dockyard.

Meanwhile the Maritime Union says the Government must be up front and tell the public what its plans are for the Cook Strait ferry service.

The Union's National Secretary Craig Harrison spoke to Charlotte Cook.