According to the Tomaree Residents and Ratepayers Association (TRRA), the council plans to redevelop the Anna Bay site after two failed attempts to sell the financially beleaguered resort.

The redevelopment will be made possible through the selloff of the resort's luxury cabins.

Before this can happen however, Crown Lands would need to give its consent because it leases the site to council.

"It looks like Port Stephens Council is trying to kick this tin down the road again as they have done since it became obvious that the venture would fail in about 2006," Dick Appleby from the TRRA said.

"No one really wants to actually sell it, because that will crystallise the massive $17 million loss so far.

"If they can retain this lease and keep some glimmer of hope alive that they will break even, they won't have to admit failure and wear the consequences.

"When is this pathetic charade going to end?"

Mayor Bruce MacKenzie confirmed the council is planning to redevelop the beach resort, pending the consent of Crown Lands.

He said the low-cost camping was a great idea and much-needed in the current holiday market.

"It is a good idea because we cut down the camping at Soldiers Point caravan park and now there is nowhere they can camp."

"I can't think of a better thing to do for the people that visit Port Stephens."

As for the TRRA's comments, the mayor had a clear message.

"We run the council, not the TRRA. It is nothing to do with them and they should stay out of it," he said.

According to Cr MacKenzie, the most any of the previous tenders offered was $2.6 million, which did not meet the council's $3 million price tag.

The council released a statement after the most recent sale attempt saying the tenders were "non-conforming".

The resort has now been dormant for more than 14 months.