The government has overturned an $18 million grant to a leadership foundation that was awarded after Governor-General David Hurley personally lobbied former Prime Minister Scott Morrison on its behalf.

The retraction of the Australian Future Leaders Program was confirmed by a government source on Wednesday evening, a day after the Labor’s leader in the Senate, Penny Wong, said it was under review.

Independent MP Monique Ryan had earlier given voice to rising discontent on the crossbench by giving notice of a plan to use Parliament to seek to disallow regulations allowing the money to be handed over.

She later described the grant as ‘mysterious’ and ‘peculiar’ on social media.

The foundation came under intense scrutiny during former Mr Morrison’s final month in office, with the government confirming the funding was awarded without a competitive tender to a charity that didn’t appear operational and which did not have a website, staff or an office.

The one-off grant was awarded without a competitive tender process and should serve to inspire reform of discretionary grants of public money, the Greens say.

“We need some answers about how it was allocated in the first place because this didn’t happen by accident,” the Greens’ justice spokesman David Shoebridge said.

The ABC first reported that the Governor-General had lobbied for the program in a closed-door meeting with Mr Morrison that included a PowerPoint presentation.

Under questioning during an estimates hearing in April, John Reid from the Department of Prime Minister and Cabinet confirmed that the government had worked on the program with the office of the Official Secretary to the Governor-General.

He confirmed the money would be handed to a foundation called The Australian Future Leaders Foundation Limited following a “closed, non-competitive selection process” and that Mr Morrison had been briefed on it.

Mr Reid said he was not aware that the registered charity, headed by Chris Hartley, had an office, website or phone number.

The prime minister’s department previously said that due diligence was carried out before it awarded the funding.

The Governor-General’s office stated the program had been informed by extensive consultation with stakeholders and had the support of university vice-chancellors.

Mr Hartley, the foundation’s director, did not return a call seeking comment.