A 40-hectare section of land between Weir Street and Saddleback Mountain Road was up for discussion at the Kiama Council meeting on Tuesday night.

If allowed by council, and then approved by the state government, the rural land would be rezoned to low-density residential land and subdivided into 455 lots.

There would be 285 residential lots (sized at 450 square metres), 140 small residential lots (sized at 300 square metres), and 30 townhouse sites.

The site stretches 1.55km long (north-south) and 360m wide (east-west).

The centre of the site contains heritage-listed Kendalls Cemetery, and there is a likelihood Aboriginal relics are located along the site. 

Council staff concluded the land has been deemed as potentially suitable for residential development if additional housing is needed in Kiama.

However, plans for the housing development did not satisfy a majority of councillors at the meeting, who have asked the developer to undertake more studies and devise better sewerage and drainage solutions.

"We decided that its premature to send it through (to the state government for determination)," Mayor Mark Honey said.

"Councillors weren't satisfied with the plans, there are drainage and sewerage problems that need addressing, and a raft of other concerns."

Councillor Neil Reilly wants the development knocked on its head altogether.

"The state government is saying we need more houses and greenfield development in Kiama, I totally disagree," he said.

"It seems to me that everybody wants to have a say in how many homes and dwellings there should be in Kiama, except for people in Kiama.

"Developers are only too happy to be making a profit out of concreting our green hills.

"Not only is it a huge site, but the people developing it are not putting anything back into it, just narrow streets."

Cr Reilly believes the studies the developer has been asked to undertake will take years to complete.