After years of unresolved disputes over how the area should be used, the government has moved to disband the 15-member Caulfield Racecourse Reserve Trust and will introduce new laws to manage the site as it was always intended – as a racing facility with recreational parkland for the community.

The long-awaited move paves the way for one of Melbourne's best-kept secrets – about 15 MCGs worth of open space in the heart of inner-city suburbia – to be more accessible to the public.

Environment Minister Lily D'Ambrosio​ said the government's legislation would also result in a new independent body to manage the reserve, which is currently home to premier racing events such as the Caulfield Cup and the Blue Diamond Stakes.

"Adopting a modern land management structure for the Caulfield Racecourse Reserve will ensure it can continue to host some of Australia's best racing and provide accessible open space for the local community to enjoy," Ms D'Ambrosio said.

Situated in a municipality that happens to have the least open space in Melbourne, the Caulfield Racecourse Reserve was originally gazetted for three purposes: parkland, public recreation and horse racing.

But residents have described the area as a "tragic waste of space", and the Auditor-General has found "significant deficiencies" in the management of the reserve, including conflicts of interest, lack of accountability, and minimal oversight by the state government.

A key problem is that the Trust is the landlord of the site and the Melbourne Racing Club is its tenant, but six of the trustees are also MRC nominees (a further six are nominated by the government and three others represent the Glen Eira council). As a result of the MRC's influence, the reserve has predominantly been used over the years for racing and training purposes.

The recommendation to disband the trustees was made by a bipartisan panel that had been set up by the government to look at future management options.

Oakleigh Labor MP Steve Dimopoulos​ – who was part of the panel along with Liberal MP David Southwick​ and independent chair Ken Ryan – said he welcomed the minister's request and expected the trustees to resign, as asked. Resigning freely would avert the need for the government to introduce new laws giving power to sack the governing board.

"I want to work with the minister to see what opportunities there are for more people from my local community to use the hidden public space at the Caulfield Racecourse Reserve – both for active sports and public recreation," Mr Dimopoulos said.