The bar was to open in the city centre, but authorities withheld the necessary liquor licence on the recommendation of police, who cited concerns for public safety.

The pop-up venture, which relies for success on the "buzz" generated by its fleeting status, was to exist for 16 nights between June 28 and July 22, in art studio and exhibition space Gallery: 5 Crown Lane.

The bar first materialised on Market St, Wollongong, for eight nights in March.

The licence application, on hold with the Independent Liquor and Gaming Authority, included increasing the bar's capacity from 60 to 130 people.

Police said the Crown Lane venue lacked the necessary fire safety equipment, and its single toilet, while an "ancillary" concern, was a problem.

In a statement, directors Luke McNamara and Zach Kitschke, of the TIRO Group, the company behind The Drop, said they would continue to work with Wollongong City Council and police in the hope the bar would yet open.

"Despite putting forward a watertight plan of management and providing extensive justification for the legitimate, safe and responsible use of the space, we have met hurdles at nearly every step," the pair said.

"We are committed to hosting safe and compliant events and ... have agreed to upgrade the building to meet Building Code of Australia standards.

"We have also allowed [the] council to determine the hours we have live music and imposed voluntary measures on ourselves, including extending the hours we engage security.

"We're more than willing to work through any issues around fire safety."

Wollongong licensing Sergeant Paul Hoyer said police objected to the pair's licence application because the Crown Lane venue could not safely hold 130 people.

He said the building had no fire safety schedule, fire evacuation plan, fire safety certificate, sprinkler system, illuminated fire signs or other fire safety equipment, other than two small extinguishers.

"[TIRO Group directors] have supplied a very good management plan, but unfortunately they've nominated a venue that's not safe," Sgt Hoyer said.

"We are just being consistent with other venues right across the Wollongong Local Area Command."

The TIRO Group management plan also indicated reliance on a single toilet. The Building Code of Australia stipulates one toilet is required for every 50 males and three toilets for every 51 to 100 females.

Wollongong council has requested a new development application for the venture, rather than allowing the venue's previous consent, from 1972, to stand.