After releasing a summary of issues earlier this year, it was announced on Friday, June 13, that the Department of Planning and Environment had not supported the proposal. The announcement came after Port Stephens Council had sought approval to prepare an amendment to its local environmental plan.

"Unlike other sites in Council's Planning Strategy, justification for its [Wallalong's] inclusion appears based on a council resolution of 2009 to include Wallalong as a new town," the department's supporting notes stated.

"Whether there may be a need for new residential zoned land and whether that should be at Wallalong, and what a new release at Wallalong may mean for other development fronts in that broader sub-region, is unknown at this time."

President of the Voices of Wallalong and Woodville group, John Redman, said the decision was a true victory for common sense.

"This landmark planning decision is timely: among other pressures for council's west ward, land developers are circling and picking off some of the best agricultural land for major residential subdivisions and massive quarry expansions by Daracon and Hanson are proposed," he said.

A department spokesperson said the council had been advised to undertake further strategic work - including addressing infrastructure requirements and funding mechanisms, environmental constraints and residential supply and demand - prior to resubmitting a new planning proposal.

"After careful deliberation, we have found that this key work should be carried out prior to any further consideration," the spokesperson said.

Other issues, such as Wallalong's isolation, were also highlighted by the state government.