An annual ceremony that marks Canada's worst aviation disaster has been cancelled.

The central Newfoundland town of Gander has decided it will not hold a memorial on Monday to mark the 26th anniversary of the Arrow Air disaster near its airport, which killed 256 U.S. military personnel and their crew.

Gander Mayor Claude Elliott says the town no longer feels a ceremony marking the Arrow Air disaster is necessary. (CBC)

The plane crashed had seconds after it lifted off following a refuelling stop at Gander.

Gander Mayor Claude Elliott said while a ceremony had been held every year at a memorial built at the crash site, officials felt there was no longer a need to carry on.

"People felt that we've paid tribute for 25 years with a service there and that was probably adequate," Elliott said.

"But it's something we're never going to forget. It's not something that's going to be ignored, but it will be done in a different way — just not there at the site, that's all."

A monument known as The Silent Witness — featuring a U.S. peacekeeper accompanied by two children - stands on the site where the chartered aircraft crashed on Dec. 12, 1985.

The plane had been carrying members of the 101st Airborne Division, based at Fort Campbell in Kentucky. They were returning home for a Christmas vacation after a stint in the Sinai.

The decision has met some opposition.

"After all those years, then all of a sudden, no - you know, for all those that have lost their lives there, [and visitors from] the States coming up, and to me I don't think it's right," said Gambo resident Ches Davis.

The town is asking local churches to note the anniversary during their services this weekend.

An annual ceremony in Fort Campbell will continue.

The investigation into the Arrow Air disaster was controversial, with the Canadian investigation into it determining that ice on the wings was the most probable cause. Aviation experts with the inquiry, though, filed a dissenting report, noting there was a lack of evidence to support the conclusion.

U.S. authorities later revealed that smoke had been found in the lungs of the deceased, all of whom were killed instantly.