CROUDACE Bay residents have banded together to oppose what they have labelled a "slumdivision" proposed for the suburb.
A $5 million subdivision is planned for 51 Parklea Avenue, which is occupied by House with No Steps.
The disability care organisation sold the property to developer Cerretti in May.
A House with No Steps spokeswoman said the organisation would leave their premises by the end of the year so the development could be built.
The trees and buildings on the site will be demolished to make way for 28 one and two-storey houses with three or four bedrooms.
Corymbia Street, which runs parallel to the block, will be connected by an access road down the middle of the site.
Residents were notified of these plans by Lake Macquarie City Council on July 9 - two weeks before public submissions were due to close.
However, community interest has seen the deadline for submissions extended to August 13.
Up until July 25, the council had received 44 submissions with concerns ranging from increased traffic to environmental impact and inconsistency with Croudace Bay's streetscape.
One resident who made a submission, Ben Rees, said the development was out of place.
"You'd expect this sort of thing in inner-city Sydney or maybe even Newcastle or Charlestown, but not here," he said.
"There's no demand for high-density living in [eastern] Lake Macquarie."
The development's average lot size is 300 square metres compared to about 600 square metres in surrounding streets.
Mr Rees said residents would like to see the development halved for this reason.
"Everything suggests it'll be social housing, but we don't know.
"We're not against it, but it's too dense, even for that."
Concerned residents have started Facebook and change.org campaigns to ensure their voices are heard.
Monteath & Powys, the company managing the development application on behalf of Ceretti, declined to comment.