Photo: © 2010 AAP/ALAN PORRITT

Under the agreement, Canberra will withhold a third of GST revenue, and use it to fund 60 per cent of hospital costs.

New South Wales, Victoria and Western Australia all went in to the two-day talks reluctant to sign up to the deal.

While $4 billion in sweeteners was enough to get reluctant premiers Kristina Keneally and John Brumby on board, the sole Liberal at the table, WA's Colin Barnett, could not be swayed.

"I am not about to compromise the integrity or the importance of the GST to my state," he said.

"The Commonwealth essentially taking one-third of the total GST pool is not acceptable to me and it is not acceptable to Western Australia."

Barnett and Rudd are still hopeful of reaching a deal in the future, but for the meantime, the deal will go ahead east of the WA border.