Tourism Australia has backed chairman Geoff Dixon, despite Qantas shelving a $A50 million deal with the agency.
Qantas claims Mr Dixon has a conflict of interest, because he is part of a group of investors agitating for change at the airline.
Mr Dixon was formerly chief executive at the airline, whom Alan Joyce succeeded in 2008.
Tourism Australia said Mr Dixon will remain as chairman, because any conflict of interest he has is "manageable".
The ABC reports Mr Dixon is part of a group of investors seeking changes at Qantas, which could include floating Jetstar.