The proposed site at South Jerrabomberra is near another 5500-block development at Googong, which the government approved recently.
Village Building Company general manager Ken Ineson told the AFR the court decision was not a setback for the project.
Village Building chief executive Bob Winnel said the Land & Federal Court found the issue of the certificate by the Department of Planning to Queanbeyan City Council to exhibit the local environmental plan for South Tralee was technically invalid.
A draft regulation has been signed by the NSW planning minister and is awaiting council sign-off by the governor in council in the next week, the AFR reports.
“For seven years there has been no new major rezoning in Queanbeyan that would have enabled some competition, “Mr Winnel said. “This has forced land prices up and given Canberra the second dearest housing in Australia.
He said the Tralee project is less remote than Googong, with better access routes.