The council's senior planning consultant Alison Blacket said, while the council was not in a position to make a formal determination regarding the 70 Camp Street site, as the application is currently before the Victorian Civil and Administrative Appeals Tribunal (VCAT), its officers recommended that a 'Notice of Refusal to Grant a Planning Permit' be issued.

Ms Blacket said, though the application was considered "acceptable", the application failed to adequately address council's "planning policy framework" as well as "zoning and overlays that affect the land in relation to, siting of vehicle access, height, visual dominance, neighbourhood character, heritage and landscape significance."

"The siting of vehicle access, excessive height, visual dominance and contemporary architectural expression of the buildings do not respect the existing or preferred neighbourhood character," she said.

"The development will visually dominate and physically detract from the heritage and landscape significance, including the integrity, authenticity, interpretation, and aesthetic qualities of Cornish Hill precinct."

A vote supporting the motion to refuse the planning permit grant was carried unanimously during Tuesday's council meeting.

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Councillor Don Henderson said the site, renowned for its Cornish mining history, was "the most unique example of intact mining history in the world."

"Are we going to throw that out, I think not," he said.

Councillor Brian Hood, who said he was happy to support the motion, said if council had allowed the proposal to go ahead, it would have set a precedent which was out of character with the area's heritage and landscape.

The application, which proposed the construction of five short term accommodation sites in oval shape barrels which were to be suspended by steel frames, received 19 objections including those from community members.

During Tuesday's meeting several members of the public objected to the proposal.

One woman who is a member of Daylesford's Historical Society said the proposal was "highly inappropriate."

She also added, if the proposal was approved, "it would send a disturbing message that development takes precedent over history."

A man, who has lived in Daylesford for more than 18 years, said the proposal was "inconsistent with the character and heritage features of the neighbourhood."

He also said, despite the application stating there was room for vehicles to safely pass each other, this was not the case.

"Contrary to what the application states, there's no room for vehicles to safely move past," he said.

He also said little information was provided as to how the accommodation would manage fire risk in the area.

A representative of David Penman, the man behind the proposal who also operates Clifftop at Hepburn, said he concurred with the council officer's recommendations and decision to deny the planning permit, admitting their plans may have been a bit "ambitious."

"We agree the structure is out of character," he said.

Another controversial sky barrels project was slated for Buninyong, drawing fierce criticism from many Buninyong residents, opposition from City of Ballarat and a final VCAT decision to deny project approval.

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Planning application documents also reveal Mr Penman proposed the same concept for Daylesford soon after VCAT's rejection of the Buninyong proposal.

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