Port Stephens Council have pushed ahead with the development of a 32 metre apartment tower at Church Street Nelson Bay, which is twice the current height limit.
Community residents are arguing the development will ruin the character of the area
and make it difficult to enforce a sensible height limit in the future.
The controversial decision follows concerns from the Urban Design Consultative Group (UDCG), attached to Newcastle City Council, who said amendments would be needed in order to gain approval.
For development to occur which exceeds the height limit, there must be public benefit and outstanding design excellence, as per the the Nelson Bay Strategy (2012).
Councillors John Nell, Geoff Dingle and Peter Kafer were unsuccessful in putting forward a plan for the development to be put on hold until a review of the Nelson Bay Strategy is published mid-year.
Nigel Waters from the Tomaree Ratepayers & Residents Association said the Council's decision has set a dangerous precedent for development in the region and defeated the purpose of community consultations.
"If counsel tries in its new strategy to impose some sort of sensible height limit in line with community expectations, then developers will be able to say 'well you approved one last year which was double the height limit, we want the same', said Mr Waters.
"...the public need to get behind this consultative process and make it very clear that we want not only sensible height limits but also a mechanism to actually control them. That's going to be difficult now that they've set this precedent."