Councillors will decide next Wednesday whether to fight developers over a 104-child centre spanning vacant properties at 10 Smith Street and 7 Grattan Street.

The vote could set up a fight at the Victorian Civil and Administrative Tribunal, which is scheduled to consider the bid after the council failed to make a decision fast enough.

Council staff say they have raised "significant concerns" with developers about the proposal, they have revealed in a report to councillors.

More stories: Dreams drive dessert chef Daniel Treacy to open new patisserie in Bendigo

Developers have modified some of their designs but have not done enough to satisfy council staff.

The report warns that developers might have to go back to the drawing board and come up with a smaller proposal.

"The constraints of this particular site may not be able to be overcome for a proposal of this nature," council staff said.

The two storey building on Grattan Street would not fit in with the more modest, single storey buildings surrounding it, council staff said.

"There is variation in building styles and heights along Grattan Street, but the predominant scale of buildings is single storey," they said.

The Grattan Street building would be too high and design elements too bulky, council staff said.

The council received 13 objections to the childcare centre bid, including from neighbours about the scale of the proposed building on Grattan Street.

Some objectors raised concerns about potential impacts on nearby heritage-listed buildings.

Council staff said they were less concerned with a building directly behind the Grattan Street one, which would look out onto Smith Street.

That said, they believed the one storey building would not reflect neighbourhood character.

They also raised the risk of the childcare centre overshadowing two nearby properties.

Some members of the public had objected out of concern for traffic and the potential loss of five on-street parking spaces in an area close to Bendigo hospital.

But any potential VCAT battle is unlikely to be fought on parking or traffic concerns, council staff indicated.

"Whilst a loss of on street parking is not desirable, it is noted that additional parking has been provided in recent years within the hospital precinct as a result of the hospital redevelopment," they said.

More news: Bendigo kicks off campaign with Huntly oval promise

They believed Grattan Street could handle more traffic.

"The nature of childcare centres is that drop off and pick up times will be staggered over a few hours during both the morning and afternoon periods," council staff said.

"That is to say, all staff and children will not arrive and leave at the same time of day.

"Whilst objectors' concerns are acknowledged, it would not be reasonable to refuse this application on the basis of traffic safety or insufficient parking."

The childcare centre bid is one of two that the council will consider on Wednesday.

The other one is earmarked for Eaglehawk Road, Ironbark. Council staff have urged elected officials to approve that project.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content: