Developers Sekisui House wanted to build more than 2200 owner-residential apartments, 250 hotel rooms and 150 serviced apartments in a series of 10-storey building on the land between David Low Way and the beach.

It argued the case for two years, finally submitting concept drawings to the council early in 2015.

The council wants to encourage five-star medium to high-rise developments in the Caloundra to Maroochydore strip.

And the Sunshine Coast has not had a five-star or premium hotel built since the 1980s, Mayor Mark Jamieson said on Tuesday.

"Council is, however, overwhelmingly of the view that the scale of development that would be enabled by the proposed planning scheme amendment is not appropriate at the Yaroomba site," Cr Jamieson said.

Yaroomba is designated a four-storey area under the Sunshine Coast's planning scheme. And the area was not zoned for 2200 residential apartments.

The planning scheme was only approved in May 2014, and the council met on Monday to debate whether it should change it to let the $1 billion proposal go ahead.

The council's planning staff had recommended a vote to keep the Sunshine Coast's planning scheme.

Cr Peter Cox was the only councillor to vote against the officer recommendations, supporting a change to let the proposal go ahead.

Cr Jamieson said the decision not to change Sunshine Coast's planning scheme to let the proposal proceed reflected the interests of region.

"I don't back away from my support for international hotels and resorts," Cr Jamieson said.

"Indeed, if we are to capitalise on future tourism and business opportunities, that premium level of accommodation and facilities currently missing from our offering will need to be filled in various locations across the coast."

Cr Jamieson said the Sunshine Coast had suffered from high unemployment and lost job opportunities in the past 30 years.

However he said the council wanted to see five-star resort complexes in the stretch from Maroochydore through to Caloundra.

"We have many other locations on the Sunshine Coast – particularly in our major commercial and tourism centres from Maroochydore through to Caloundra – where a development of this intensity and scale would be better suited and is supported by our planning scheme," he said.

"And this is exactly the calibre and standard of development that we want to see in those areas."

Cr Jamieson said he would now try to find a compromise solution for the complex.

"It is my hope that all parties can now work through a genuine dialogue to find the best solution for this site and for the Sunshine Coast."

The Sunshine Coast Environmental Council said the council's decision supported residents' views that the city should not become another Gold Coast.

"Intensive, high-rise development along the coastline is incompatible with this and is not supported by the majority of residents and visitors," Keryn Jones, president of the Sunshine Coast Environment Council, told a community forum.

Ms Jones said the decision to change the planning scheme to allow Sekisui House's project to proceed would have unwound years of work to develop the oast's planning guidelines.

"The community has a growing understanding that Sekisui's proposal for high density mixed-use residential development at Yaroomba conflicts so significantly with the current planning scheme, that it would require the undoing of its' strategic framework which guides development and character in localities across the Sunshine Coast," she said.

"As a former councillor involved in the preparation of the scheme which only came into effect in May last year, I can say that the community consultation and the examination of the characteristics and values of each community within the region was extensive."

Sekisui House has been contacted for comment.