Led by local woman Julie Hoskin, the group has been crowd-funding its battle against the mosque, which the City of Bendigo approved in June last year and which VCAT approved in August, to the state's highest court.

Chief Justice Marilyn Warren told the court on Friday the appeal would not proceed until lawyers for the Australian Islamic Mission, council and the government had seen bank documents showing the group could afford to pay costs in the event they lost the case.

Earlier fears of unrest appeared unfounded. A handful of protective service officers were outside the court before the hearing began, but only about a dozen people sat in the public gallery throughout the hearing.

One man was reprimanded and left the court, after taking footage with his mobile phone.

​Chris Townshend, representing the Australian Islamic Mission, said VCAT had compiled a summary of the objections to the mosque, and "the quite specific flavour and nature" of those objections showed they were based on "the religious practices of other Victorians", rather than planning issues.

"[They] all go to the choice of practice of religion at a very general level," Mr Townshend said.

Examples of objections included "Islam's integration with western culture", the prospect of "more people dressed in Islamic dress" and the "Islamification of Bendigo".

Mr Townshend said given the Victorian Charter of Human Rights protected the right to freedom of religion, the tribunal could have rejected these objections based on religion out of hand, but had instead given the objectors the courtesy of hearing their complaints.

The objections, he said, amounted to "an attack on freedom of religion".

Peter King, representing the objectors, told the court on Friday that 435 objections had been lodged against the mosque.

He said authorities had failed to take into account the social and economic impacts building a mosque in Bendigo might cause.

Mr King said the City of Bendigo and VCAT had rejected those objections because opponents had not shown building the mosque would cause certain negative effects. But, he argued, both the council and VCAT should have taken into account the possibility that building the mosque could have adverse social and economic effects on Bendigo.

He did not say what those social or economic effects might be.

In August, VCAT found that the Australian Islamic Mission's proposal to build a mosque, sports hall and other facilities on Rowena Street in Bendigo East did not present significant social or other impacts to the community and would not unreasonably affect nearby homes.

The objectors' group had argued the mosque project, which was granted a planning permit in June, would create noise pollution and traffic congestion.

But those objections were not raised in the appeal on Friday, which relied mostly on the question of whether the council and VCAT had properly considered the question of the social effects of building the mosque, and whether VCAT had the authority to decide the case, or should have referred it back to the council.

The court has adjourned its judgement on their appeal against the planning permit being granted for the mosque.