A controversial special housing area near Lake Hāwea has been given a green light by Cabinet.
The Hāwea development was approved alongside Wanaka-based Bright Sky special housing area.
Together, they could translate into an additional 681 homes for the district.
But opposition has been gathering with plans to challenge the 400-lot SHA on the outskirts of Lake Hāwea township.
Queenstown Lakes District Mayor Jim Boult said he was pleased more affordable housing would be available.
"While the council listened carefully to the concerns expressed by some in the community about the SHA, we also recognised that we need to cater for growth in the district and that Hāwea is increasingly being seen as an affordable satellite for those working in Wanaka," Mr Boult said.
Both developers agreed to increase their contribution to the district's community housing trust, which meant up to 83 new homes would be earmarked for an assisted ownership programme or long term secure rentals, he said.
However, Hāwea Community Association chairperson April Mackenzie said residents and ratepayers would continue to fight against the Hāwea development.
"The feeling in the community has been clear from the get go and every public meeting we've had, the community has been unanimous about the fact that they wanted it to be done through the district planning processes inside the urban growth boundaries, and the use of this legislation wasn't necessary," Ms Mackenzie said.
"We're still going to be looking at our options to see how we can continue to oppose this development.
"We are pro-development and pro-affordable housing, but there are mechanisms and we have a community that would welcome and has welcomed growth with developments. But they haven't got the infrastructure in place, we have a non-compliant waste water treatment plant now."
She said the development was hung on creating a pipeline to the council's Project Pure treatment plant near Wanaka Airport, but there wasn't an agreed upon route for the pipe.
The developers need to apply to the council for resource consents by September.