Pembrokeshire council says the technium centre in the county is to remain open.
The Welsh Assembly Government said on Thursday it was withdrawing funding from six of the 10 business centres in Wales, including Pembroke Dock.
The council said it owned the building and although it would not be part of the technium network it would continue as a business incubation centre.
The assembly government said funding was cut as it had just four tenants and an occupancy rate of nine per cent.
Funding is being stopped at five other techniums - Aberystwyth, Baglan, Bangor, Llanelli and in the Sony plant in Bridgend.
Four other techniums - at Swansea University, the city's SA1 docklands development, St Asaph and Cwmbran - will continue to be funded.
Launched in 2001, the centres were aimed at helping new science and technology businesses to develop.
But they have been criticised for not delivering value for money or creating as many jobs as expected.
Pembrokeshire's cabinet member for regeneration and economic development John Allen-Mirehouse said that, contrary to media reports, the £10m facility in the county would not be closing.
"The Welsh Assembly Government does own some techniums in Wales but Technium Pembrokeshire is not one of them" he said.
"The building is owned and managed by Pembrokeshire council, not the assembly government, and its future is a matter for the county council.
Value for money
"Although Technium Pembrokeshire will no longer be part of the technium network in Wales, it will remain in use as an incubation and innovation centre."
Councillor Allen-Mirehouse said the council was unhappy with the way the assembly government carried out the technium review.
"There was no engagement or consultation with us whatsoever," he added.
"I think many people will find ironic that they have made this decision at the same time as the UK government is launching a £200m network of innovation and technology centres."
An assembly government spokesman said funding was being withdrawn from six of the techniums as they not been delivering value for money or creating the number of jobs expected.
"At no point did we say we were closing the building at Pembroke Dock and eventually it will be up to the council to decide what they want to do with it.
"The reality is that the Pembroke Dock facility has four tenants and occupancy rate of nine per cent. It is our duty to make sure we are providing value for money.
"Whatever happens to the building, we want to reassure current tenants that we will not abandon them and will fulfil our obligations by finding alternative office space if required.
"This will be a gradual process and we will not see techniums closing overnight."
Former Welsh economic development minister Andrew Davies blamed senior management and senior civil servants for the closures.
He told BBC Radio Wales: "The weaknesses of the technium concept have been identified over many years. Audit reports on it have said it is very good in principle but delivery is poor."
A spokesman for the permanent secretary at the assembly government said: "We are focused on supporting ministers during this particularly busy and challenging period and have no wish to comment on anecdotes."