The lease term has been increased from 20 to 50 years and is dependent on legislative change, which will be introduced into parliament early next year.

The Parks Victoria decision has forced chairlift owner Richard Hudson to start a new public campaign to put pressure on the government to allow him to restart the ride.

It has been idle since May 16, 2006 when a cable malfunction stranded people. It was the third major incident since January 3, 2003 when a pylon supporting cables collapsed, putting 18 people in hospital and stranding dozens more for up to six hours.

On March 18, 2004 an elderly woman had her legs crushed when her chair slid down the cable and crashed into the chair in front.

In October 2007, the chairlift company was convicted and fined $110,000 over the incident. Mr Hudson is appealing the decision.

In August 2008 at Frankston Magistrates Court, Mr Hudson and WorkSafe cut a deal that saw his company escape conviction over the May 2006 incident if he agreed to an order for further improvements.

The order included installing US-made Belleville springs that WorkSafe claims will better hold chairs to the cable.

But Mr Hudson and his engineering adviser, Professor Bruce Kuhnell of Monash University, claim the springs are not suited to the chairlift's design and would actually make the ride less safe.

The ride was built in 1960 by Czech-born engineerVladimir Hajek, who also built Victoria's first chairlift at Falls Creek.

The peninsula chairlift is the oldest, longest and most famous in Victoria. It takes people from the bottom of Arthurs Seat up 950 metres, has 74 chairs and can carry 222 passengers an hour.

Last week, Parks Victoria's general manager of commercial business Andrew Minack said: "With a longer lease term we are confident of finding a new operator.

"Parks Victoria is keen to see this popular attraction back in business."

The Mail believes a new chairlift would cost at least $4million.

Mr Hudson has been contacting media outlets since last week, printed 5000 leaflets entitled an 'Open letter to Victorian Government', which have been distributed throughout the southern peninsula and appealed directly to Premier John Brumby.

Peninsula business people, politicians and tourist operators are dismayed that Mr Hudson, 79, who has replaced all eight pylons and installed a new drive, table, brakes and controls since 2004, has been denied a lease to operate the chairlift due to his ongoing battle with WorkSafe and Parks Victoria.