THE NSW Planning Assessment Commission's about-face regarding stage one of the $3 billion Calderwood project has left residents "stunned".
Last April, the PAC rejected Lend Lease's stage one application.
The 4800-lot subdivision had concept plan approval and its first stage included 231 residential lots and 120 medium-density dwellings.
The PAC cited the project's inconsistency with the Illawarra Regional Strategy, which prioritises West Dapto.
It was also concerned about potential flooding as among the reasons for refusal.
Lend Lease lodged an appeal with the Land and Environment Court and the hearing is set for March 6-8.
However, last week the Department of Planning and Infrastructure sent letters to those who had made submissions during the project's assessment.
The letter said that based on further information including "expert advice" available, "the PAC is now satisfied that the Stage 1 project may be approved subject to appropriate conditions including flood mitigation works, development control guidelines and contributions towards local infrastructure".
There was a community campaign, including a mass petition calling for the return of planning powers for the Calderwood land release area to the relevant local governments.
Shellharbour and Wollongong city councils opposed the proposal, deeming it economically, environmentally and socially unsustainable.
Tullimbar's Rob Grimmett, who went door-knocking to acquire petition signatures, was "absolutely stunned".
"After not hearing a thing for months, then hearing that they've backflipped, I'm almost lost for words," he said.
"I believe that all sections of our community should be fighting this tooth and nail. It's a retrograde step that will cost all ratepayers. It's unwarranted and too early."
Kiama MP Gareth Ward described the move as a "dramatic backflip".
"It's an extraordinary breach of trust and faith," he said.
"The PAC issued a lengthy repudiation and now to go into the appeal process and say there are no grounds they're seeking to object on is extraordinary.
"This is prime agricultural land and this will place additional burden on an already congested Albion Park area."
Shellharbour Mayor Marianne Saliba said while she was disappointed the PAC had changed its position, the council hadn't altered its view.
A PAC spokeswoman said as part of the court process, it had engaged independent planning consultants and based on that advice, the PAC now believed the stage one component may be approved subject to conditions.
"However, the case is now in the hands of the courts and the court is now the determining authority," she said.
A Lend Lease spokesperson said they were unable to provide further information until such time that the Calderwood Stage 1 application was determined by the Land and Environment Court.