But proponents of the school, Charles Sturt University (CSU) and La Trobe University, have pledged to continue pushing for the Murray Darling Medical School that would have campuses in Bendigo, Orange and Wagga Wagga.

Eighty per cent of enrolments in the mooted school would be reserved for rural, regional and Indigenous students.

CSU Vice Chancellor Professor Andy Vann and his counterpart at La Trobe Professor John Dewar said students living in the regions were the key to filling medical workforce gaps.

"The only way to improve the supply of health services in rural and regional communities is to empower students from those communities to train and practise in those areas themselves," Professor Dewar said.

Professor Vann told of an April report by Rural Health Workforce Australia showing less than five per cent of Australian medical graduates were intending to practise in rural communities as GPs.

"The COAG Health Council also noted that as few as 17 per cent of all medical graduates in their final years expressed an interest in a rural medical career as a specialist or GP," he said.

"This is despite millions of dollars spent over the last decade to increase medical student numbers and substantially grow the pipeline of medical students wanting to work in rural practice."

Professor Vann said available evidence suggested that as few as 10 per cent of new medical graduates went to work in rural areas as rural specialists or GPs after completing postgraduate training.

"You simply can't service the health needs of 32 per cent of the population with only 10 per cent of the medical graduates," he said.

"This has real implications for economic and social sustainability in rural and regional areas."