The request will be made in the interest of "starting a conversation" about options to protect koala habitat on the swathe of land earmarked for private redevelopment into a residential caravan park with 12 long-term sites.

The decision, put forward as a recommendation by mayor Peta Pinson, was made at council's May meeting.

CEO Dr Clare Allen will now liaise with Member for Port Macquarie Leslie Williams about options for the site which is also the subject of a 24,600-signature community petition opposing any development.

Mrs Williams will be asked to make representations on behalf of council and the community to the Minister for Energy and Environment, the Hon Matt Kean MP, requesting that the government explore the purchase of the former Fantasy Glades site as a koala protection measure.

The development application for a residential caravan park on land owned by Jeff Crowe, who has approval to convert the old Cinderella castle at the popular former theme park site into a cafe, is still to go before the development assessment panel (DAP).

If a decision is not reached by the DAP, the development application will go before council for determination.

Mr Crowe was surprised to hear of council's recommendation for his land.

"I can't comment on that because I'm not aware of it," Mr Crowe said.

"Council has not spoken to me. It's privately owned land. We are still awaiting for the DA to go though."

Mr Crowe said despite the vocal campaign to stop his development, he believes the majority of the community would love to see the old theme park site re-invigorated.

Of the five acres in question, Mr Crowe says he plans to redevelop a small portion and leave the remainder as natural habitat which will be protected by a Koala Plan of Management. He would also like to refurbish some of the old Fantasy Glades buildings that remain standing, including Snow White's cottage and the old church.

"I would like council to be a bit more clear about this and what their motive is," he said.

Read more: Koalas over caravans: residents launch petition objecting to Fantasy Glades redevelopment

The site off Parklands Close and Wandella Avenue is zoned R1 General Residential, E2 Environmental Conservation and RE2 Private Recreation under the provisions of Port Macquarie-Hastings LEP 2011. A social impact statement prepared as a part of the application to develop the land says the proposal will not encroach on the Environmental Conservation zoned land.

The site is surrounded by residential developments to the north and east. An environmental corridor which connects into Wrights Creek is located at the western end.

The Shelly Beach Residents Group and Guulagu Koala Custodians group both spearheaded the petition and say the land provides a narrow koala corridor with Sea Acres Rainforest.

The petition to stop the development says the site is covered in tall trees and is also home migratory birds and other wildlife.

Resident spokesperson Sara Phillips believes the Biodiversity Development Assessment Report or Koala Plan of Management does not adequately protect the large numbers of koalas living in the area.

"We're relieved the council is taking seriously the concerns of the 25,000 people who have signed the petition to save core koala habitat," Ms Phillips said.

"It is forecast that in nine short years there won't be any koalas living east of the Pacific Highway so it is urgent that council move quickly to protect core koala habitat, especially on properties such as the proposed caravan park.

"Council states in their Koala Recovery Strategy that habitat loss is the core reason for the decline in our local koala population yet we are not seeing enough regulations in place to protect koala habitat."

In acknowledging the petition at the meeting, council will write to the resident groups outlining its actions and strategies to manage and preserve koala habitats across Port Macquarie-Hastings.

Mayor Peta Pinson said her response to the concerns expressed in the petition is to consider what is going to be of greater benefit to the community.

"There is a lot of conjecture in our community about koalas and rightly so, because we are known for our coastal koalas and people are drawn to them. Our tourists love going to our Koala Hospital," Cr Pinson said.

"I absolutely love the Koala Hospital, but it's important that we tell our story in council. Not just about koalas, but about everything we do because we do some really great things.

"Fantasy Glades - I remember this place as a child - it was magical. The vision of the owner of this land wanted to turn this into a place where people could go and enjoy and be in nature and to have a coffee and snacks."

Cr Pinson said her concern was the site plan has now evolved into a proposed manufactured home development with little community benefit.

"Is this really what we want for this section of natural environment - that we allow someone to develop it? With respect to the owner, I am not against development. The thing is, this may have more environmental value to our community than a manufactured caravan park has.

"As a community we have to stand up - there comes a point where we have to say no, no we don't want this to happen in our area. Because once our environment has been tampered with - when it's gone it's gone."

If the development proposed for the site is knocked back, Cr Pinson said having conversations with the state government now could provide an alternative or "plan B" in the future.

Cr Peter Alley questioned whether or not the state government could have it declared a nature reserve or re-zoned if it were to purchase the site.

Director Melissa Watkins said the proposal still has to go before the development assessment panel and any representation to the state government would simply present options for further exploration.

She said the whole site is not koala habitat, but the subject land contains habitat.

"As to whether or not the government would buy the whole lot or just the habitat, I'm trying to keep it open to actually allow some negotiation for the government to talk to the current owners for a potential outcome on the site," she said.

"At this stage it really is just the start of that conversation."

Cr Griffiths did not support the decision fearing it would create a precedent for council on matters of koalas, the environment and land use.

"Are we just going to keep asking for land to be purchased because the community is asking us to do it?" she said.

Cr Pinson believes the vision of the developer has changed and the community has shown a desire for this pocket of land to be retained as koala habitat.

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