Minister of Heritage James Moore speaks during Question Period in the House of Commons on Nov. 20, 2008. (Sean Kilpatrick/Canadian Press)

Heritage Minister James Moore says the government is still committed to creating a permanent home for a Portrait Gallery of Canada.

Last week, the portrait gallery's director lost her job and the collection was folded into Library and Archives Canada, leading to fears in the arts community that there was no more hope for an exhibit space for the collection.

Moore said those moves were necessary in the midst of a recession.

"It doesn't mean we don't want a permanent home. In time there will be one, but as of right now we had seven different proposals but none of them were adequate," Moore said in an interview Thursday with CBC's Q cultural affairs show.

Moore said the government halted the plan to put the gallery in the former U.S. embassy in Ottawa because $11 million had been spent and costs were escalating on the project.

A call for proposals to host the gallery from across the country resulted in seven proposals from six different cities, but none of them qualified, Moore said.

"Some of them didn't meet the requirements on climate control; one of the proposals, they refused to abide by the Official Languages Act, which is a bit of a no-no … so none of them qualified," he said.

"Given those dynamics and given where we were sitting, we decided to make the best of the situation so we've come up with now $3.5 million a year in permanent funding for the portrait gallery to make the collection available around the country."

The funding will lead to a series of travelling exhibits to showcase a collection that Moore said is as beautiful, rich and representative of Canadian heritage.

There will be upcoming exhibits at Winterlude in Ottawa, in Vancouver during the 2010 games and there will be an online component, which the minister said will make the collection accessible to more Canadians than a permanent gallery.

The federal government has been criticized by the visual arts community and supporters of the gallery such as Liberal Senator Jerry Grafstein for failing to create a gallery.

Sandy Nairne, the director of Britain's National Portrait Gallery, told CBC News Canada's failure to create a portrait gallery was a missed opportunity.

"It's a hugely important way to convey things about nationhood and about identity but also turn about and present a wonderful collection," he said.

"People know that Canada has a wonderful collection but what they also expect is that there should be really good leadership and a way of making collaborations possible that other people will care about," Nairne added.

But Moore argued the government had to make choices in tough economic times.

"Look at the network of museums we have in time of recession, building a new human rights museum in Winnipeg, Pier 21 in Halifax, the War Museum, the Natural History Museum, the Museum of Civilization, the Science and Tech museum, the National Art Gallery — all the things that we're spending record amounts of money on across this country to make sure Canadians understand, recognize and have access to our incredible artistic talent and our incredible collections … we are going to take lectures from no one," he said.

Moore did not offer any estimate on when a permanent home for the portrait gallery might be back on the government's agenda.