A new hearing will now be held on August 9, and Khadr's trial is due to start at the military base on August 10.
"Mr Khadr could not admit to something he did not do. He did not kill anybody," Edney said.
Canadian rights groups, backed by a federal court ruling, has pressed the Canadian government to intervene and repatriate Khadr, but the government has refused to do so.
"After careful consideration of the legal merits of the July 5, 2010, ruling from the Federal Court, the government of Canada will appeal the decision to the Federal Court of Appeal," Rob Nicholson, Canada's justice minister, said in a statement.
"I will not willingly let the US government use me to fulfil its goal"
Nicholson said that the case raised "important issues" over the government's right to conduct foreign affairs.
"Omar Khadr faces very serious charges, including murder, attempted murder, conspiracy, material support for terrorism, and spying," he said.
In January, Canada's high court ruled that the government had breached Khadr's rights by sharing statements he made to Canadian officials with Washington. It ordered Ottawa to rectify the situation.
Canada's high court had pointed to three interrogations of Khadr by Canadian foreign affairs and intelligence agency officials in 2003 and 2004, in one case after he had been deprived of sleep to make him more inclined to talk.
The extracted statements were shared with US authorities, and could "prove inculpatory in upcoming proceedings against him," it said.
Ottawa has asked the United States not to use the shared evidence to prosecute Khadr, but Washington did not agree to the request.
'Unfairness and injustice'
US forces in Afghanistan took Khadr prisoner when he was just 15 years old in July 2002. He has now been in Guantanamo Bay for eight years.
The US government alleges that Khadr killed a US soldier with a grenade after rising from the rubble of an al-Qaeda compound, the lone survivor of a four-hour US bombardment.
Khadr said he no longer intended to participate in the proceedings after firing his US defence team for the third time and complaining of the "unfairness and injustice" of the military commission.
"I will not willingly let the US government use me to fulfil its goal." Khadr said.
"I have been used too many times when I was a child, and that is why I am here, taking blame and paying for things I did not have a choice in doing but was told to do by elders."
"It's going to be the same thing with lawyers or without lawyers. It is going to be life sentence," he said.
Against Khadr's wishes
When Army Colonel Patrick Parrish, the presiding judge, told Khadr he had to be present in court to represent himself without his lawyers, the young man replied: "I might be present, but I will not be participating."
Parrish then ordered Lieutenant-Colonel Jon Jackson, the American military defence lawyer, to stay on, against Khadr's wishes.
Under the rules of the military tribunals at Guantanamo, Khadr's Canadian lawyers cannot represent him without US attorneys.
Edney criticised a system that would require his client's admission of guilt in order to obtain leniency.
"It is a tragedy, this young man who has been abandoned and has lost hope," he said.