They criticised the appointment of Vaile as being out of step with the university's commitment to forward thinking and innovation.
Current chancellor Paul Jeans yesterday confirmed in an email to staff that Vaile made the decision not to go ahead with the appointment that was announced two weeks ago.
"Mr Vaile said that he commends the university for its ethos as a unifying force of and for our region and the communities it serves," he said.
"Based on feedback from some of the university's constituents, he believes that the best course of action is not to proceed with the appointment.
"We respect Mr Vaile's decision and recognise that he has made this decision in the best interests of the university."
Lock the Gate Alliance NSW spokeswoman Georgina Woods said the backlash was particularly severe because Whitehaven Coal had failed to respond to the challenge of climate change.
"Mr Vaile's role as chair of Whitehaven meant his appointment as chancellor was always going to be untenable," she said.
"We commend him for taking this decision and look forward to hearing the University's decision on a replacement.
"Appointing the boss of Whitehaven Coal really would have hampered the university in playing a meaningful part in leading us through structural change facing Newcastle and the Hunter region as the world shifts away from coal."