The controversial Adler A-110 shotgun will remain banned after NSW split from the rest of the states over how to reclassify it.
State police and justice ministers met with federal Justice Minister Michael Keenan in Melbourne on Friday to discuss how to deal with the gun, which is capable of firing eight shots in eight seconds.
The federal government has imposed a temporary import ban on the shotgun and similar rapid-fire weapons until a consensus can be reached on lifting it from the current category A to a more restrictive category.
Mr Keenan said the meeting had failed to come to a consensus, so the ban would remain in place.
"There is a majority view amongst all the jurisdictions, but the reality is on a national agreement, you do need unanimous agreement from all of the jurisdictions to move forward," he said in Melbourne.
"The council has committed to continuing to have that conversation."
All of the states except NSW called for the weapon to be given a "D" classification - the toughest of the four categories.
Victorian Police Minister Lisa Neville said if this military-grade restriction was not agreed, the shotgun should be permanently banned from import.
NSW Police Minister Troy Grant said there were "still some issues to be resolved" before NSW was satisfied, but his government's focus was on a "stronger national firearms agreement".
The issue would now be discussed among the states without resorting to a formal meeting, Mr Keenan said.
However, the minister announced the states had agreed to a gun amnesty starting in mid-2017.
The amnesty would allow non-registered firearms to be handed in without risk of prosecution.
The states will handle their own individual processes.
It is estimated there are 250,000 illicit long arms and 10,000 handguns on Australian streets.
"Australia is world renowned for the strength of our firearm laws, but illegal firearms do remain a deadly weapon of choice for organised criminals," Mr Keenan said.
Liberal Democrats senator David Leyonhjelm said giving the shotgun a 'D' classification would effectively ban its importation.
Senator Leyonhjelm praised NSW for taking a different stance to the other states, saying the police ministers other than Mr Grant had reacted to the shotgun in an "emotional" way rather than to use common sense.
"What it's highlighted is Australia has a very immature attitude to guns," he told AAP.
Senator Leyonhjelm said he suspected Mr Keenan wanted to ban the shotgun altogether and would not have a problem with the states taking their time with its reclassification.
He said the amnesty would have no impact on crime.
"I'm very confident the only guns that will be surrendered during the amnesty will be ones where people have acquired them as a consequence of somebody dying and the person inheriting the property says I don't want it anymore.
"The ones on the streets are the ones held by criminals and there's no way they will be surrendered."
