On Tuesday night, councillors took the advice of council staff and knocked the development on its head.

All councillors present voted in favour of council not endorsing the planning proposal proceeding to the next stage with the NSW Department of Environment and Planning.

The development was planned for 25 Dido Street, about 600m west of Bombo Station.

The developer's vision was to subdivide the land into about 60 lots with minimum lot sizes of 450 square-metres and building heights limited to 8.5m.

The proponent had argued there was a demand for more residential land in Kiama, and their development would meet this demand.

Council staff explained the site was not included in the Kiama Urban Strategy for greenfield urban expansion due to its highly visual ridge location and that it was not required.

"On average 143 new dwellings are required each year," council staff said, via the March business paper.

"Since the Regional Plan was published (2015/2016 - 2017/2018) a total of 579 new dwellings have been approved in the Kiama LGA. The claim dwelling projections have not been achieved and will not be achieved is not considered correct."

The application was also inconsistent with a number of regional planning policies and strategies.

Council staff also stated the Dido Street development would extend residential development further west than the existing western boundary, contrary to community values.