Port Stephens Council put the resort's lease up for sale in August last year in a joint request for proposal process.

The price tag called for no less than $3 million and the lease included two main changes.

The site is under lease from Crown Lands but with the sale comes an agreement to extend the lease beyond the current 2029 time frame, and the site has been reclassified from tourist resort to use for business purposes.

But despite the changes the council received just four proposals which were all "non-conforming" and the sale will not go ahead.

"Council will not be proceeding with any external proposals at this time as those received during the request for proposal process were non-conforming," a statement released by Port Stephens Council read.

"We are now discussing other options with councillors and Crown Lands."

The beleaguered resort has been dormant for 14 months.

An Examiner investigation revealed the site has cost ratepayers almost $170,000 since it closed, not including loan repayments of $289,000 and the annual lease payment to Crown Lands of $140,938.

This is the second time in four years the resort has been put on the market, with a failed sale in 2010.