TORONTO - Opposition parties accused the Ontario government of playing politics Thursday when it suddenly abandoned plans to build a natural gas plant in Oakville amid intense opposition from local residents.

People who live near the site of the proposed gas plant near the Ford Motor factory in Oakville warn it's too close to homes and schools.

Local opponents rallied at the Ontario legislature and brought in famed American environmentalist Erin Brockovich to help generate publicity for their fight with the government.

Oakville Liberal Kevin Flynn even battled his own government's plan for the gas plant, which the province had said for four years was necessary to meet electricity demand.

However, Energy Minister Brad Duguid said Thursday the government has had a change of heart.

Duguid said there were higher demand projections for electricity in the area — an affluent community west of Toronto — when the plant was first proposed, but officials have determined they no longer need the power it would have generated.

Flynn dismissed as "cynical" NDP and Progressive Conservative claims that the Liberals pulled the plug on the plant when they realized it could cost them his seat next October.

However, the opposition parties insisted cancelling the plant was to help Flynn in the provincial election.

"It seems pretty clear that the decision they're making is not based on the analysis that they've been pushing for ages," said New Democrat Peter Tabuns.

"For ages they've said, 'We need this plant,' but I think they've done polling and I think they see themselves as in trouble in Oakville."

It was purely a political decision to cancel the plant, said Progressive Conservative critic Ted Chudleigh, and will empower opponents of other energy projects such as wind mills, solar farms and another natural gas plant in King Township north of Toronto.

"One bad poll and (Premier Dalton) McGuinty decided this plant was not as important as the seat, so he cancelled the plant," said Chudleigh.

"Time will tell if he keeps the seat or whether his efforts are too little, too late."

The Green Party of Ontario immediately demanded the government scrap the proposed natural gas plant in King Township.

"Although this (Oakville) decision is a step in the right direction, it doesn’t go far enough," Green Party Leader Mike Schreiner said in a release.

"We are calling on the government to do the right thing and indefinitely stop construction of the gas plant in King Township."

Oakville residents have been battling the 975-megawatt gas plant, arguing it would be too close to backyards, with 11,000 homes and 16 schools within three kilometres of the proposed site.

Residents feared an accidental explosion at the site, located near railway lines and major roads, could be devastating.

A blast at a Connecticut power plant in February killed six workers. That plant was separated from communities by a river and buffer zones.

Brockovich, who usually is paid about $25,000 per speech, suggested last week to residents that they telephone politicians to push for change. The fact Oakville is an affluent community shouldn't matter, she said.

TransCanada (TSX:TRP) (NYSE:TRP), which was awarded a 20-year contract to build and operate the plant, has been in negotiations to address residents' concerns.

Former Microsoft Canada president Frank Clegg, who is chairman of the Citizens for Clean Air group which is fighting the plant, said TransCanada is in litigation with the town.

A company safety report released last week said TransCanada has operated natural gas-fired power plants in Ontario for almost 20 years with no public safety incidents.

TransCanada could sue for more than $1 billion, warned Chudleigh.

"I don't know why they wouldn’t (sue) for non-fulfilment of contract which was worth about $1.2 billion," he said.

TransCanada issued a statement Thursday, saying it acknowledged the government's decision that the gas plant was no longer needed.

"In order to comply with the government's direction, TransCanada has been informed that the Ontario Power Authority wishes to begin discussions where both sides mutually agree to terminate the contract and discuss reasonable payments TransCanada is entitled to," the company said.