Councillors approved the rezoning of the unused Holdsworth Road and Hobson Street site in North Bendigo, which will now be sold to a private developer.

The site, which has sat vacant for almost 15 years, has several contamination issues from the former Bendigo Psychiatric Hospital and exploratory mining activities.

While most of the site has been decontaminated, some areas remain unremediated due to underground services.

Councillor Peter Cox said he had opposed the "half-baked" rezoning proposal in the past, and was opposing it again on native vegetation and safety grounds.

"Tree after tree has been removed and we have been left with a moonscape. I thought we could get a win win for the amenity of the site and urban development but it's not the case," he said. 

"What concerns me the most is us urging people to not plant edible plants in the current soil on the site." 

He called for decontamination of the entire site, seconded by Cr Elise Chapman.

Cr James Williams agreed there were some shortcomings of the proposal, but said the appropriate measures had been put in place. 

"Bendigo has contamination in a lot of areas and this is a vexed issue... but a large portion of this area has been cleaned up," he said.

 "I also agree it's disappointing in regards to the loss of vegetation but a lot of work has taken place for this proposal."

City planning and development director Prue Mansfield defended the unremediated area, saying further assessment was needed before decontamination work could take place. 

The Environmental Protection Authority, Department of Environment and Primary Industries all supported the rezoning. The proposal will now go to the Minister for Planning Matthew Guy for final approval.