The Lake Malbena development for a fly-fishing venture, complete with huts and a bedrock helicopter landing area within the Walls of Jerusalem National Park, had won state and federal approvals but was blocked by the council.

The proponents, Daniel and Simone Hackett, said they would appeal the decision with the Tasmanian Planning Commission.

"While we sympathise with the passion shown on the day, the council had a single, clear role: to assess the DA against the planning scheme," Mr Hackett said in a statement.

"Despite the best of efforts and advice of the council's planner, and having the required information and resources, we feel strongly that a number of councillors failed in this role.

"We will appeal this decision in due course."

Wilderness Society state acting-campaign manager Tom Allen welcomed the move as a right-to-appeal process did not exist under the expressions of interest or the state's Reserve Activity Assessment processes.

More on the Lake Malbena proposal:

“Rights of appeal lead to better, more rigorous decisions because it effectively crowd-sources solutions from local knowledge," he said.

Tourism Industry Council Tasmania chief executive Luke Martin said council decisions on development proposals under the Land Use Planning Act were designed to enable checks and balances for projects within local communities. 

"However, seeing what occurred yesterday, and the immense pressure this small council clearly experienced around what is, under LUPA, a relatively benign project certainly raises questions about the role of local government in this space," he said.

Property Council of Australia state executive director Brian Wightman maintained planning decisions on complex projects needed to be removed from councils and placed within an independent statutory body.

"The Property Council continues to express concern that planning decisions remain open to political interference and should be made by professionals with expertise in interpretation, implementation and decision making under the relevant planning legislation," he said.

Labor leader Rebecca White said the Central Highlands Council did their job as was their right as community representatives and, through that, had an important role to play in planning.

Greens leader Cassy O'Connor said the council's decision was a blow for the government's expressions interests process.

She said the Greens would move a motion to for the government abandon it once Parliament returned.

Local Government Association of Tasmania chief executive Katrena Stephenson said state and federal planning approvals were separate from council determinations on developments.

She said legislative change would be needed to remove councils from this planning approvals process.