“It’s arthouse meets grindhouse, both dark and hopeful and irreverent and urgent," Soda_Jerk have said of the work.

“It is our un-writing of Australian mythology, where a misogynistic remark is met with the sharp beak of a bird, or the jaws of a crocodile. Where feminist bike gangs conspire and rampage, and bicentenary celebrations are ravaged by flesh-eating sheep." 

While ACMI said it “remains totally committed to presenting the work and supporting the artists”, the Ian Potter Foundation released a statement on Monday distancing itself from the commission, which it funded to the tune of $100,000 through its Ian Potter Moving Image Commission and the Ian Potter Cultural Trust.

"The Ian Potter Cultural Trust has stated to ACMI that in the circumstances it does not wish to be associated with the marketing or publicity promoting this production," the statement said.

"It is a very controversial piece of art and The Ian Potter Cultural Trust respects their right to create it, to show it, and for audiences to form their own opinion in respect of its message."

Soda_Jerk, comprising Australian sisters Dan and Dominique Angeloro, allege the trust  called the work “un-Australian” and pulled its support “because it’s not in line with their conservative political values”.

The trust did not specify what it believed to be "controversial" about the work. The Age understands staff remained supportive of the work until late in the piece but that there was opposition among trustees.

The Angeloros said they remained “deeply shaken” by the decision and warned of a “chilling effect” on artists seeking funding in future.

“We feel it shouldn’t matter whether they share our views or not,” the pair said.

The Angeloros said they were “sincerely grateful” for the Ian Potter Foundation’s financial support which allowed them to complete the film, “but we really do worry about the broader implications of this decision”.

The trust said the decision would not affect its funding arrangements for the Moving Image Commission, which commits $100,000 each to five separate artists over a 10-year-period for the creation of new, film-based artworks. TERROR NULLIUS is the third commission.

ACMI director and CEO Katrina Sedgwick said Soda_Jerk was “one of Australia’s most electrifying art collectives” who “work at the nexus of free culture activism and cinematic sampling”.

“TERROR NULLIUS is a film that will force viewers to rethink what they ‘know' about Australia’s cinema history,” she said.

ACMI has previously presented a work by Soda_Jerk called The Was, which was created in collaboration with fellow sample-maestros, electronic music act The Avalanches.

Soda_Jerk has presented artworks at major institutions around the world, including at London’s Barbican Centre.