Volunteer Marine Rescue Queensland (VMRQ) says it does not know how it will fund infrastructure upgrades in the Torres Strait, in far north Queensland, after missing out on Regional Development Australia funding.
The organisation had applied for $464,000 to build sheds to house boats and train rescuers on Yorke Island and St Pauls Island.
VMRQ president Keith Williams says he is still hoping to improve VMR's presence in the region.
"The communities are very, very enthusiastic and behind it and training was going to start with roughly 20 to 30 people and expand from there," he said.
"Getting materials and labour to those areas to get infrastructure built is an expensive exercise.
"At this stage we're not sure where alternative funding can come from but that'll certainly be my mission to seek to get those areas funded."
He says it is "big blow" to the VMRQ.
"Not being able to have suitable facilities to keep those boats safe from the weather and the elements," he said.
"As you know the environment up there can be quite harsh and also they were to incorporate training areas inside those sheds.
"For the time being we're stuck for an area to conduct dedicated training for those crews."