Western Australia has been dealt a blow in its legal battle with Clive Palmer after the Commonwealth stopped short of backing a new trial.

The latest twist came as Prime Minister Scott Morrison and Finance Minister Mathias Cormann urged Mr Palmer to drop his challenge of WA’s border closures.

The matter returned to the Federal Court on Friday for a case management hearing sought by the WA government.

WA is arguing the case should be vacated and a new trial of the issues convened after the federal government withdrew its support for Mr Palmer’s position.

But the Commonwealth has declined to submit whether its evidence should be struck out on the basis that it is no longer involved in the matter.

Health Minister Roger Cook said West Australians would be “bitterly disappointed” with the Commonwealth’s stance.

“We believe it does not go far enough,” Mr Cook said.

“We can’t understand why they would not support us in what we believe is a very reasonable submission.”

The Prime Minister said he had an “outstanding relationship” with WA Premier Mark McGowan and backed calls for Mr Palmer to abandon the proceedings.

“He’s the only one who can prevent that case from going forward and I think that would be a good decision,” Mr Morrison told reporters.

“We do and have provided support for the outcomes that the Western Australian government is seeking to achieve.”

Mr Cormann earlier appealed to Mr Palmer to reconsider his position in light of recent outbreaks in the eastern states.

“These borders are very important for the people of Western Australia,” he said.

The Prime Minister has said the Commonwealth withdrew from the matter to spare West Australians unnecessary anxiety.

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He added that it was nothing to do with a potential electoral backlash for WA Liberal MPs.

WA Solicitor-General Joshua Thomson SC told Friday’s hearing that retaining the Commonwealth’s expert testimony despite its withdrawal would disadvantage the state.

But Mr Palmer’s barrister Peter Dunning said the evidence could not simply be disregarded even if a new trial was called.

Justice Darryl Rangiah has reserved his decision.

Mr Palmer, who was denied an exemption to WA’s hard border closures, is challenging the restrictions on the basis they are unconstitutional.

A ruling had been expected in the High Court in October after a four-day hearing concluded in the Federal Court last week.

That is almost certain to be delayed if a new trial of issues is ordered.

-AAP