It was a fitting end to 2009 for Dungog Shire Council when it approved its first residential subdivision since 1999 after the State Department of Planning placed a moratorium on the council approving subdivision developments.

Mayor Glenn Wall said the move was a milestone for the town and the council with 30 lots approved for the village of Vacy.

He said two other applications for subdivisions had been lodged with the council, one for 49 lots, also at Vacy, the other for about 130 lots on Limeburners Creek Road at Clarence Town.

Cr Wall said all the applications had been lodged by local developers.

"The moratorium was put in place until we put together a new local environmental plan," Cr Wall said.

"The original plan which dated back to 1990 was a vague document that didn't nail exactly where residential development should and shouldn't take place and Dungog was ending up with a lot of fragmented land, a lot of spot rezonings.

"The new plan now concentrates on placing subdivisions in and around the shire's existing villages, leaving rural areas for what they are, so agricultural land is not fragmented," he said.

Cr Wall said the demand was there for both commercial and residential development in the town.

"The demand is certainly there with a lot of questions being asked about the possibility of business expansion and businesses coming to town. Whether Tillegra Dam is the catalyst for the interest I couldn't say," Cr Wall said.