Brought to the table by the Tomaree Headland Heritage Group, the concept is to transform the Tomaree Lodge site, formerly a residential centre for people with disabilities, into an education and tourism precinct.

The group wants the site to house a Marine Research Centre, museum and interpretive centre showcasing the area's rich WWII military history, visitor information centre and perhaps a restaurant or cafe with oyster-tasting tours on the side.

It's a far more palatable idea than whacking a casino on the nine-hectare block at the foothill of Tomaree Heads, as proposed back in 2012, the group's president, Peter Clough, said.

"The idea to put a 12-storey casino there had the community in uproar," he said.

"All we have focused in on is what the site could be in the future that would sit comfortably with the community.

"It's a pretty precious bit of land, and there's a strong feeling in the community that we must keep it in those hands in some way."

But, the future of the land hangs in the balance, awaiting the outcome of the Worimi Aboriginal Land Council's appeal for a Native Title Claim that was first rejected in 2005.

Even if that claim is successful, Mr Clough hopes the two groups can work together to educate locals and visitors about Worimi culture.

The state government owns the land, which is managed by the Department of Communities and Justice (DCJ).

It owned and operated the Tomaree Lodge site as a large residential centre for people with disabilities for more than three decades, a DCJ spokeswoman said.

"The residents have now transitioned into more appropriate small group homes," the spokeswoman said.

"The NSW Government is consulting closely with the community, Port Stephens Council and the Tomaree Headland Heritage Group regarding the use of Tomaree Lodge and is awaiting the judgement of an Aboriginal Land Clam, which will further guide how the site is used in the future."

Step one of developing the land, what will undoubtedly be a major undertaking, is to convince the NSW Government to give it to the group in the form of a management trust.

From there, the real work can begin.

The group has already put together its vision statement and has the backing of Port Stephens Council - which gave them a grant to develop a concept plan with the help of a Sydney-based architectural firm.

A spokeswoman for the council said it's waiting for the final Conservation Management Plan, which was being prepared by the state government to look at options for the site.

"The Tomaree Headland Heritage Group were successful in receiving a grant from council to support the development of a concept plan for the site," she said.

The federal government has thrown its financial support behind the project, with a grant from the Department of Veterans Affairs to collect the definitive military history of the site.

The headland, which was part of Fort Tomaree, played an important role in Australia's east coast defence line during WWII.

Back then, it was home to about 500 Australian and American soldiers and the site was fitted out with search light stations, a radar tower, torpedo tubes and barracks.

While most of the fort's buildings and guns have been removed, historic gun emplacements remain.

It's an iconic site, Mr Clough said, rich with history, nestled between pristine water and rugged bushland.

"That's why we don't want to see, and the community at large do not want to see, major development out there," he said.

"There's a lot of history there and it's a natural beauty, they are key reasons why we want to keep it in this community - to have input into what it will be in the future.

"There are heritage-listed buildings on this fantastic, magnificent site that overlooks Port Stephens.

"That's where our passion comes from."

The group is keen to reinstate the jetty, which was removed years ago and replaced with a pontoon.

It could open the door to a ferry service between Nelson Bay and the headland, with the opportunity to extend the offering to Lemon Tree Passage, Soldiers Point and Bannisters.

It's hoped that could also nip parking problems in the bud, encouraging more public transport to lighten the load on the small carpark at the foot of the hugely popular Tomaree Head summit walk.

From the top, visitors have panoramic views to Yacaaba Head, Cabbage Tree, Boondelbah and Broughton islands.

More than 200,000 visitors made the short hike to the summit each year, a clear demonstration of the site's value, Mr Clough said.

"In the end we want to conserve it, but we don't just want to conserve it and have it end up dilapidated," he said.

"We need a whole lot of things done to make it a better experience for the visitors and people who go there.

"We want to turn it into an education and tourism precinct and not just because the site deserves it, but because the site has a lot of costs that go with it.

"It's somewhere between $300,000 and $500,000 each year, whoever the government gifts it to has to pick up that bill - so we need activities there that generate revenue."

There's already an oyster hatchery at the headland, and Mr Clough hopes that could be an opportunity for visitors to stop, sip champagne and learn more about local produce.

Mr Clough said the project initially had the support of the former NSW premier, Gladys Berejiklian, who he said made a commitment to keep the land in public hands.

"It's not Crown Land, it's freehold land, and the risk is that if they have no further use for it that it will be sold off," he said.

"It could be subdivided and have development on there, and that's where the community decided to try and have a say in all of this.

"We got a commitment from Gladys Berejiklian who signed a letter to keep it in public hands and it had the support of the opposition . . . things have changed since then, we have a different premier and different ministers, but we won't stop making sure that promise is honoured," he said.

If the group gains control of the site, the next step would be to finalise a masterplan for the next few years.

Then it would look to reinstate the jetty and pontoon, put in a visitor and information kiosk and eventually establish a marine research facility, a museum showcasing WWII history and cultural activities that highlight Worimi culture.

The Worimi Aboriginal Land Council was contacted for comment.