VCAT’s decision not to support the Diocese of Sandhurst’s application was due to the high conservation significance of the site.

It stated that future proposals would need to adopt a more “organic response to the highly significant native vegetation” on the Golden Square land.

The City of Greater Bendigo council approved the 69-lot Golden Square subdivision last year and was taken to VCAT by the Aspinall Action Group, the Bendigo and District Environment Council and Bendigo residents.

The Catholic Diocese of Bendigo owns the land and in 2008 applied to create 78 lots and remove native vegetation.

Councillors were split on the decision to approve the subdivision and Strathfieldsaye ward councillor Keith Reynard later apologised for letting the planning application go through.

Yesterday, Aspinall Action Group spokeswoman Cheryl Hardie said VCAT had made an important decision.

“They made a decision the council couldn’t make for themselves,” she said.

“It was a David and Goliath experience.”

The Diocese of Sandhurst released a statement saying it had relied on the advice of a number of experts in drafting the proposed subdivision that received the approval of the council.

“The Aspinall Street property is an important asset of the Sandhurst Diocese. It's development would provide valuable funds to aid the work of the church in areas such as welfare and education,’’ it said.

“In these changing times, the church, together with other establishments, can no longer rely on traditional sources of income and must explore alternative methods in order to be able to continue to support the community it exists in.

“This parcel of land, which is zoned for residential use, is central to this commitment and will provide substantial housing opportunities for the people of Bendigo”

The council’s director of planning and development Prue Mansfield said the decision was finely balanced and that new information emerged during the hearing.