A wildlife park and hotel development at Wentworth Falls has been deemed "state significant", taking it out of council's hands.
It will instead be overseen by either an independent planning panel or the NSW planning minister.
Council is worried that it will not have to comply with local environment plans.
The controversial development was approved back in 1989 amid strong community opposition. Three decades later, it was revived, despite reservations by councillors that it did not conform to current standards.
The Blue Mountains Conservation Society was also aghast at the so-called "zombie DA", telling council it believed it was "dead and buried" given the length of time since approval.
The original DA approved a flora and fauna park with a souvenir shop and refreshment room, wildlife exhibits and a crocodile pond on the site at 10 Great Western Highway, Wentworth Falls. The crocodile plans were later removed after extensive community pressure.
In its 2019 incarnation, it had grown to include a $30 million five- to six-star wildlife park development with 40 hotel rooms.
Now, the plans are for a $194 million wildlife park and tourism development, which is how it has gained its lofty status.
A planning department spokesman told the Gazette: "The proposal qualifies as a state significant development because it is a zoo with a capital investment value (CIV) greater than $30 million and a development for other tourist-related purposes with a CIV greater than $100 million."
But the mayor, Mark Greenhill, said the state significant development process "allows inappropriate proposals to bypass our carefully calibrated local planning frameworks. It jeopardises our World Heritage Area and our unique way of life."
The local environment plan limits development on the land between towns and villages to preserve the character of the area.
"Developments such as these set a precedent that could change the Blue Mountains forever," Cr Greenhill said.
A planning department spokesman said that no DA had yet been received. He said when one is lodged, it would be placed on public exhibition for at least 28 days and comment sought from interested parties, including government authorities and the community.
But Cr Greenhill said council staff found this very concerning. "Council's role is essentially reduced to being able to make a submission."
It is unclear exactly what the latest proposal involves and attempts by the Gazette to contact the developer's legal representative were unsuccessful.