Wollondilly Council is standing by its opposition to plans for Wilton New Town despite approving a planning agreement for the proposed development.
The planning document outlines Walker Corporation's financial contributions and commitments if the proposal is approved.
Councillors supported the voluntary planning agreement (VPA) at last week's council meeting.
Wollondilly mayor Matthew Deeth said approving the VPA did not mean the council had changed its position on the development.
"We are committed to ensuring we have a great new town at Wilton or no town at all," Cr Deeth said.
"At times the planning system can be difficult to understand but we want to assure the community that the council has not changed its position on Wilton.
"We also need to ensure that we can achieve the best possible outcomes for the community in the future.
"The VPA is not designed to fix all of the problems we have with the site but to outline the contributions the developer has to make to local infrastructure."
Under current plans the development application for Wilton New Town would attract a contribution rate of $20,000 per block. The VPA offered a contribution of more than $41,000 per block.
Cr Deeth said this would set a precedent for other developers in the region, if the plans were approved.
"We are looking at a 100 per cent increase on what we could have gotten," he said.
"Walker certainly did come to the table with other things as well.
"There is a proposed commemorative walk to honour WWI and WWII veterans, the Bargo-Nepean Gorge walk which is the first step to having a national park in that region and $4.3 million for the Wilton Sportsground.
"This will not only benefit the new community, but the existing community as well."
However not everyone is pleased the VPA was approved.
Wilton Action Group spokesman Brian Williams said the council's resolution to support the VPA means Walker Corporation's development application for stages one and two will now proceed to determination by the Sydney Western City Planning Panel.
"When deals are done with a developer over money to fund projects that earn implicit support from community, it's easy to say yes and the real message about the catastrophic outcomes of this development are lost in a sway of small wins," he said.
"Let's not forget that this development will see the destruction of a koala habitat corridor, insufficient jobs, a stack of 225-square metre homes and mass excavation to accommodate a housing yield that will result in over-development of a site."