A direction had been issued to discontinue any variations for the ongoing prison project unless expressly approved by Cabinet.
The Samoa Observer reported the prison project had already cost nearly $US4 million and a second phase had yet to start.
It was not clear when it would start now that the funding restrictions had been put in place.
The Cabinet also gave notice that all further works in the next phase must go through the government tendering process.
There had been public criticism for the awarding of the contract for the first phase of the project.
This was awarded to Schwartz Construction, a company owned by Alaiasa Schwartz Hunt, the brother of the Minister of Prison and Rehabilitation Services.
A recent request of $US4million for the second phase of the project was rejected by the Ministry of Finance.