Director of planning and environment Scott Riley said the council would not approve applications that do not meet the council's standards, ABC News reported.

Riley said the developer can appeal against the council's decision, but the arguments against the proposal are strong.

“There is a number of significant challenges in terms of the application itself in relation to the strategic plan, the rural zone, quantity of water – they are significant challenges in terms of meeting the provisions," he told ABC News.

Earlier this month, Belyando Mayor Peter Freeleagus said he wanted permission from the State Government to refuse all development applications until his shire gets a reliable water supply. He said the water supply to the town of Moranbah is struggling to meet existing demand.

In August, Freeleagus told International Longwall News that while the coal industry is an important economic input to the town, the current resources boom and the resulting local property prices were creating social ramifications.

The mining boom has seen the shire's population explode by 50% from 26,000 to 37,000 this year alone.

Two hours drive from the coastal town of Mackay, Moranbah is a purpose-built coal-mining town, servicing workers from nearby BHP Billiton Mitsubishi Alliance coal mines at Peak Downs, Goonyella/Riverside and Broadmeadow in addition to Anglo Coal's Moranbah North mine.

Property values have nearly doubled in Moranbah since 2001, with the median asking price for a house now in the vicinity of $A320,000.