Premier David Bartlett said yesterday the government had accepted the Tasmanian Planning Commission's recommendation that the Ralphs Bay canal estate proposal be rejected.

He said a ban on all canal estate developments would give developers certainty and help attract "the best and most sustainable developments to Tasmania".

"In coming weeks, I will take a paper to cabinet, outlining the process by which we can deliver certainty for potential investors, by banning the development of canal estates," he said.

Mr Bartlett said the Tasmanian Planning Commission had delivered a comprehensive rejection of Walker Corporation's proposal in its final decision.

"It found the proposal was unsustainable, and not consistent with the objectives of the planning system or the state coastal policy," he said.

"Wherever possible, we want to spare developers the considerable time, hassle and expense of pursuing projects that are not sustainable, and highly likely to be rejected by the Planning Commission."

Denison Greens MHA and Secretary to Cabinet Cassy O'Connor - a former Ralphs Bay campaigner - cried in Parliament yesterday when the Premier made the announcement.

"It's hard to imagine that six months ago, a year ago, 612 years ago, we'd have a Labor premier announcing a move to protect Tasmania's beautiful coastlines," she said.

"It's a great day for Ralphs Bay, it's a great day for the community which has spent 612 years fighting so hard to save it, and it's a great day for Tasmania.

"There's certainly enough scientific and planning evidence and experience from interstate - NSW and Victoria have banned canal estates - for us to know that we're moving in absolutely the right direction for our coastline here."

The Save Ralphs Bay group's Jane MacDonald said the decision was a "triumph of the democratic process".

"The developer has the right to put up a development proposal but the community has the right to say we don't support it," she said.