Canadian Prime Minister Stephen Harper has blocked the Ministry of Defense from spending any more money on the Canadian version of the JSF, according to news reports.
The country currently has $8.9 billion set aside for F-35 procurement.
Harper has also revoked the MOD's authority to buy any other weapon systems until government officials complete their inquiry over the Canadian military's handling of the F-35 program.
"The government will put that supervision in place before we proceed," he told reporters on Tuesday.
A damning report issued by Canada's Auditor-General alleges that defense officials failed to inform top government decision makers "of the problems and associated risks" of buying the F-35.
Defense leaders also intentionally sugar-coated cost analysis of the fighter, which is slated to replace Canada's fleet of F-18 fighters, according to the April 3 report.
The findings have rattled what was already a tenuous relationship between Ottawa and Washington on the JSF program.
Canada had planned to buy 65 new F-35s over the course of the next several years.
That planned purchase, along with those planned by the United Kingdom and Australia, made Canada one of the stronger members in the JSF coalition.
Italy, the Netherlands, Turkey, Denmark and Norway round out the nine-member international JSF consortium.
However, Ottawa has yet to sign a formal contract with the JSF program office and F-35 builder Lockheed Martin for the new planes.
Canadian defense officials were already dropping hints they may leave the F-35 program, even before news of the Auditor-General's report surfaced.
"We have not yet discounted the possibility of backing out of the program," Canadian Associate Defense Minister Julian Fantino told the Ottawa Citizen on March 15.
And in light of recent developments, the chances that deal gets done keeps slipping as reports over the MOD's actions on the program continue to come out.
Canada's potential exit from the F-35 effort could also send a chill among the rest of the JSF's partner nations, prompting others to reconsider their commitment to the program.
Severe defense spending cuts in the United Kingdom already have London throttling back its planned purchases of the F-35.
The current fiscal crisis sweeping over the European Union has only added more doubt as to whether the JSF coalition can remain intact.
But Air Force Secretary Michael Donley told reporters in Washington last Thursday that the JSF international remained strong, despite recent events.
Dealing with the issues going on in Canada and elsewhere in the coalition, while trying to get the U.S. fleet of F-35s flying is just "part of what managing an international program is all about," Donley said.