The recommendation, outlined in a previously unreleased 2013 draft conservation management plan for the area's 1950s post-war international modernist style homes, has been ignored by the Barr government as it pursues plans to demolish almost the entire precinct to raise money and build up property around the light rail development.

Released under freedom of information rules, the report shows "a substantial proportion of the original dwelling units ... could be retained, conserved and incorporated into a redevelopment project".

The dilapidated Dickson Towers, Owen Flats, pair houses, three-storey flats and maisonettes designed by architect Sydney Ancher all face demolition. The government wants to retain just two buildings while the ACT Heritage Council believes about 40 per cent should given heritage protection and preserved.

However, the report compiled by Graham Brooks and Associates advises modern high-density buildings could be added on some of the De Burgh Street frontage in Lyneham, as well as over existing cul-de-sac driveways and on the sites of five pair houses and a freestanding gardeners cottage which have lesser heritage significance.

All but one of the Owen Flats buildings could be demolished as well as one row of garden flats, making way for new buildings on open space behind the Karuah Maisonettes. The Owen flats currently offer the "lowest standing of contemporary housing accommodation" in the area and their architectural significant is replicated in other Australian housing developments.

The report calls for two of the four-storey bachelor flats at the northern end of the precinct to be retained, one on either side of Northbourne Avenue.

Following the recommendations would create significant space for modern, high value development which could be effectively integrated into the precinct, considered a leading example of European and British-influenced architectural and city theory of the late 1950s.

Architect Ken Woolley and Australian National University emeritus professor Ken Taylor advised the report's authors.

Chief Minister Andrew Barr has planned for only one building on either side of Northbourne Avenue to be retained, as the government seeks to raise $400 million from land sales to benefit the city-to-Gungahlin tram line.

Next week the ACT Civil and Administrative Tribunal will consider an appeal from the National Trust, seeking to have the whole precinct protected.

The government is challenging the National Trust's legal standing in the case.

Already $60 million in infrastructure sales bonuses have been secured from the Abbott government for the sale of public housing and surplus government office buildings. The sales are expected to reap $400 million for the territory budget, money which will be spent on modern public housing stock around Canberra.

The report acknowledges the buildings have reached the end of their useful life for public housing and that even their original residents reported problems in amenity, function and liveability of the homes.

It notes the run-down appearance of external elements of the precinct, easily visible from Northbourne Avenue, but describes their physical condition as "fair to reasonable".

Adapting the buildings for contemporary use could be achieved and the direct relationship between the buildings and the roadway should be retained.

The report describes the precinct as being "of considerable heritage significance to the ACT" and a crucial example of National Capital Development Commission planning and construction in Canberra's early development.

If some of the original buildings are demolished, the work should be "undertaken in a manner that minimises impacts of the integrity of the retained groups and their distinctive urban patterns," the report said.

New buildings should be "carefully integrated" into areas considered to be of lesser heritage significance while the massing and siting of new construction should reflect Sydney Ancher's "innovative planning and character."

The government's master plan for the area calls for about 1100 apartments to be built on the precinct's land.