The NSW government is under pressure to reconsider a housing development that will flatten a wildlife refuge that was spared in the Black Summer bushfires.
Federal Environment Minister Tanya Plibersek has just approved a 153-home estate that will clear most of a mature forest on the NSW South Coast.
The site at Manyana covers about 20 hectares and is documented habitat for a range of native species, including grey-headed flying foxes, which are vulnerable to extinction.
In recent weeks, the critically endangered Swift Parrot - one of Australia's rarest animals - was also spotted on the development site by a trained ecologist.
The Manyana community has fought for years to defeat the Ozy Homes development.
With federal approval now in place, the Manyana Matters Environmental Association wants the NSW government to reassess the project, saying too much has changed since state approvals were granted in 2008.
They have support from the Greens, who warn a string of approved but long-dormant developments could jeopardise threatened species living in habitat in coastal NSW.
The federal approval rejects one stage of the Ozy Homes development but says the rest can proceed under almost 40 conditions meant to curb or offset environmental harms.
Conditions include limiting clearing of grey-headed flying fox habitat to 1.25 hectares, and planting food trees.
But opponents say 17 of the roughly 20 hectare site will be lost and some of the conditions are absurd.
One requires the protection of a patch of littoral rainforest - a critically endangered type of ecosystem. But another says some of it can go in order to satisfy NSW laws requiring bushfire protection zones around homes.
"On one hand they are saying this rainforest is so important it must be protected, but on the other they're saying 'if it's going to pose a bushfire risk to the houses you can chop it down'," Manyana Matters president Bill Eger said.
As locals hold nightly vigils at the site, Ms Plibersek has written to NSW Planning Minister Paul Scully.
In the letter, she says she lacks the power to weigh in on whether the site is an appropriate place for 153 new homes, but it might be something for NSW to consider.
However, Mr Scully and the Shoalhaven City Council are now warring over who, if anyone, should reconsider the development.
Mr Scully says a parliamentary committee is looking at so-called zombie development applications - a catch all term for dormant projects approved years ago.
But he says councils have long had powers to deal with such circumstances, including the opportunity to withdraw development applications.
"If they choose not to exercise that capacity that's a question that should go to those individual councils," he told the ABC.
But outgoing Shoalhaven Mayor Amanda Findley says the council has been looking to the NSW government for leadership.
"I'm astonished because he knows that the ultimate power in NSW is the state government, and the state government can do this with the stroke of a pen," she told the broadcaster.
"They can take over land, they can turn it back to forest, they can give it a conservation zoning at any point in time without councils being involved."
Australian National University's David Lindenmayer, a leading expert in forest ecology, says the Manyana project is the latest example of the environment suffering death by a thousand cuts.
He can't reconcile the federal government spending cash to help imperilled species while simultaneously greenlighting projects that will destroy mature, intact habitat.
The minister's office says the government has to make decisions in accordance with the facts and national environment laws.
"That's what happens on every project, and that's what's happened here."
Ozy Homes did not respond to AAP's request for comment.
