Plans for a data centre which would have been built metres from people’s homes in a Sydney suburb have been scrapped following intense push-back by campaigners.

The data centre was being developed by Goodman Group, Australia’s biggest property company, and would have seen it construct a A$1.2bn (£630m; $841m), 90-megawatt facility known as Project Mars in the Lane Cove area.

The company confirmed it was withdrawing its application in a letter to the local planning authority. It follows a concerted opposition against the data centre by local residents and campaigners.

The dispute captures a wider disagreement in Australia over the role of data centres.

With the mainstreaming of generative AI in recent years, there has been a huge swell in demand for data centres, and Australia – with its abundance of clean energy, natural gas reserves, and land – has become a global destination for their construction.

However, while the country’s government has been keen to attract investment from global AI companies, there has also been stiff opposition due to the huge demands the centres place on water and energy supplies, and the disruption they cause local communities.

The proposal for Project Mars, which would have been constructed about 20 metres from the nearest house in the suburb of Lane Cove, received 374 submissions during a consultation – with just nine in support of it.

According to local news website In the Cove, this is highest number of submissions ever received for a data centre application, external.

In its letter to New South Wales Department of Planning, Goodman Group said since starting the planning process in March 2025, it had “undertaken extensive technical investigations, stakeholder engagement and community consultation”.

“During this time, the policy and regulatory environment for large-scale data centre development has evolved significantly,” it said.

It said it had “carefully considered these changes” along with the “views of the local community”, and concluded it would not proceed with the development.

The decision by Goodman Group follows an announcement by the New South Wales government last month that it would be introducing a fast-track programme for data centres.

The programme would allow them to be assessed within 75 days, provided they meet requirements around certain standards and fund the additional supply of water and energy.

In a message posted to the Facebook page of Lane Cove Responsible Planning Group, Anthony Roberts, a member of the New South Wales Legislative Assembly representing Lane Cove, said it was “a huge win for the Lane Cove West community”.

“This is a common-sense win for our community,” he said.

“This victory sends a clear message to other data centre developers. To find suitable locations before putting proposals forward.

“Data centres have an important role to play, but developments of this size and scale need to be appropriately located and planned with the surrounding community in mind.”