The current US army artillery system is 40 years old
US Defence Secretary Donald Rumsfeld confirmed on Wednesday that the Pentagon intended to cancel the Crusader, saying that US military strategy had changed.
"This is a good choice," he told a press conference at the Pentagon.
"We will see it through to the end."
But supporters of the Crusader project in Congress said they planned to fight the decision to cancel the weapon, which they said US forces desperately needed.
Republican Representative JC Watts of Oklahoma, where the Crusader is assembled by United Defense Industries Inc, told the Reuters news agency he would fight the decision "every step of the way".
The Crusader is a 36-tonne self-propelled, rapid-fire cannon that was to have entered service by 2008.
Some in the US army had argued that it was badly needed to replace the existing Paladin artillery system, which is more than 40 years old.
Cold War relic
But Mr Rumsfeld and other Bush administration officials see it as a lumbering relic of the Cold War that does not suit more mobile, hi-tech forces able to fight in more distant conflicts such as Afghanistan.
The army has already spent $2bn on the Crusader, but the other $9bn is now meant to be spent on other projects.
The BBC's Pentagon correspondent, Nick Childs, said the debate has already turned into a messy political battle, and will be a test for the Bush administration.