In the latest instance of Victoria's tough conflict-of-interest regulations covering councils, the shire last week abandoned a planned vote on the project, which is being opposed by neighbours.

Local Government Minister Natalie Hutchins has been called in to adjudicate on whether the conflicts of interest in this case are severe enough to stop councillors voting.

It is the second conflict-of-interest issue this month she has been called on to adjudicate.

The first came after Lord Mayor Robert Doyle and  other councillors at Melbourne City Council were unable to vote on a plan involving a residential developer that they had taken campaign donations from.

At Cape Schanck, opponents of the RACV's plan say its size and height are inappropriate for the rugged Bass Strait coastline where the conference centre will sit, within the National Golf Course and Cape Schanck Resort.

Council officers had recommended approving the project, and opponents say councillors were waving it through purely on economic grounds.

The council estimates the conference centre would create 500 jobs during construction and almost 100 once open.

Councillors had been due to vote on the project last Wednesday.

But the meeting to decide on it was cancelled at the last minute after the council sought advice from the Local Government Minister about "a governance matter".

Ms Hutchins said the Andrews government was conducting a review of the Local Government Act that would be, she said, "the first comprehensive review ... in decades. This includes provisions to deal with conflicts of interest".

Cape Schanck resident Irene Wyld is among those opposing the development, and said the RACV had not been receptive to requests the plan be lowered in height. "They don't feel the need to talk to us because they are big and powerful and they will not compromise on anything," she said.

The RACV did not respond to repeated attempts to contact it on Sunday.

Mornington Peninsula mayor Bev Colomb confirmed conflicts of interest had caused the delay on the vote on the proposed RACV resort. The hold-up would only be a matter of weeks, she said. "Everyone wants to be around the table and feel conflict-free," she said. "This is just a postponement. We will be determining the issue soon."

The Municipal Association of Victoria's chief, Rob Spence, said that conflict of interest rules were very tight in the state. "And that's why you get situations like what you are observing at Mornington Peninsula," he said.

In Melbourne City Council's case, six councillors, including the lord mayor, had been unable to vote since 2013 on a plan to introduce a subdivision tax to create new open space in the city.

High-rise builder Central Equity had contributed thousands of dollars to the election campaigns of the Doyle team, and the chair of planning Ken Ong.

Ms Hutchins granted the councillors in that case an exemption allowing them to vote on the subdivision tax, but warned the council these requests should not become "par [for] the course".

The need for the Local Government Minister to be called in led Greens councillor Rohan Leppert to renew calls for a total ban on building developers making donations to state and local government candidates.