And while developers have reportedly shown significant interest in the site, residents are already expressing their concerns.

The 5.1ha site at the corner of Alfred and Russell streets has been put on the market by the Federal Government.

Owned by the government since 1916, the site has housed army and airforce training barracks and abuts prestigious Sturt St residences.

Booth and Lee real estate agent Vaughan King said the site, which would be sold by tender, was a prime location for residential development, and could potentially host 60 lots.

"Taking into consideration the sale of the blocks and the homes that will go on it, it will be in the range of a $20 to $25 million development," Mr King said.

But residents Margaret and John Corbett, whose Sturt St home backs onto the site, said they were concerned.

"If they do something like cram the houses on, then I won't be at all happy," Mrs Corbett said.

Alfredton Ward councillor Geoff Hayes said council had already received an application to have the site rezoned.

"There is, at council, an application to rezone it residential - that's in the process of being dealt with by the planning department," Cr Hayes said.

He said while he would like to see the site combine residential development and open space, a high-quality development would have its advantages.

"I think high-quality residential development lifts the value of housing stock.

"The parcel of land, named Broodside after a WWI battle, presented perhaps the final chance for inner Ballarat development."

While Mr King would only say the land was expected to fetch "multi-millions" he did predict lots to be priced between $230,000 and $250,000 each.

He said interest in the land had already been significant.

Mr King said the land would have to be formally rezoned by Ballarat City Council before development could proceed.

However, Mr King said any development would have to take into account the site's heritage including mature trees and the original mullock heap from the Newington Mine.

Tenders for the site will close on March 11.