The proposal, which council staff said could allow for the creation of 310 residential lots, covered land near Otford Rd and Lilyvale Rd, part of which was known as Lady Carrington Estate South.

The site has a long history of attempts to rezone for housing, but these have been knocked back. The latest plan appears likely to go the same way after consideration at Monday's meeting of by Wollongong City Council.

In an assessment report, planning staff found rezoning could lead to medium-density housing "on the bushland interface", away from transport, and in a highly bushfire prone area.

It also enable clearing 9.5ha of native vegetation, and increase runoff into the Hacking River catchment.

Helensburgh and the site in question had not been identified as urban housing release areas under council or regional plans.

"Council has consistently considered the site unsuitable for low density residential development since the 1980s," the report said.

Of 236 public submissions, 86 per cent objected to the proposal.

The land had been subdivided into 142 lots years ago, but development had been prevented by an environmental zoning.

The landowners are two companies, Ensile Pty Ltd and Bob's Bushland Pty Ltd, whose shareholders include members of Helensburgh's Blackwell family, members of the Hogarth family, and other investors including Hong Sun and Robert Qi from Sydney. Ensile was a company of the late Bob Hogarth, developer and former director of Lady Carrington Estates.

Of about 204ha covered by the proposal, only 19ha was to be for housing, with the rest to remain bushland. Many of the proposed lots would have been subject to dual occupancy permission.

Council's planners provided options other than a flat refusal for councillors to consider, including approving the plan, approving rezoning for "environmental living" (a few large lots), rezoning for conservation or recreation, or inclusion in an "urban release area".

"Following additional assessment, it is considered that the site is not suitable for a residential zone, and it is recommended that the submitted proposal not be supported," the report said.

"The site may be appropriate for a lower density form of development which may be considered as an alternative planning proposal.".

The Environment Protection Agency said in its advice that the site should be properly audited for contamination and remediation, which had not occurred.

"The site has a history of legacy waste issues which is the result of asbestos contaminated landfill and other unknown possible contaminants," the EPA said in comments included in the council report.

"As the land is being offered to other parties it is required potential contamination issues and options and cost for management be evaluated and disclosed."

Despite the proximity to bushfire-prone areas the NSW Rural Fire Service had no objection to the proposal.