Federal Club captain Bob Correll said the club and MBark "had an understanding" since mid-2016 but only this month entered a formal contract to "proceed with advancing the development".

Mr Correll said the government was putting together an integrated plan that covered Red Hill and the club. A draft is expected to be ready for public consultation by the second half of 2018.

The golf club wants to build 125 retirement units on its land. It is yet to submit a development application. In addition, there are plans for a new clubhouse, swimming pool and gym.

Mr Correll said the section of land for the village would be sublet to MBark, which would oversee the construction and then be the operators. The proposed development would cost more than $100 million to build.

As part of the agreement, 10.4 hectares would be returned to the Red Hill Nature Reserve. The village and clubhouse would take about 6.5 hectares of the 85-hectare block.

"The village would sit on the existing practice fairway and car park areas so it’s not near any of the perimeter of the course or housing areas around the course or close to the nature park itself," he said.

"It actually sits in the middle of the golf course."

Since 1995, seven proposals have been put forward to develop various parts of the area, but none have succeeded - including a 2000 plan for 140 houses, townhouses and units, and an embassy development in 2011.

In 2015, the club discussed plans to build about 70 three-bedroom villas on a disused section east of the 14th fairway overlooking the golf course, and another 70 two-bedroom apartments near the clubhouse.

The proposals had either failed to get approvals or were withdrawn. The over 55 village is the eighth proposal.

The club signed the initial agreement in October 2015 with MBark, which would be given a 99-year peppercorn lease. In mid-2016 club members gave "authority" for it to go ahead, Mr Correll said. The plans approved by the members two years ago had stayed relatively the same.

"Basically there’s been a lot of consultation and really it still pretty much in that mode," he said.

"The integrated plan for the Red Hill precinct is another step in the process so depending on what comes out there, it’ll influence it."

Mr Correll said the major benefit would be an upgraded water supply and underground water storage. He said the issue was critical, with the future of the golf course at risk.

"This is all about the long-term survival of the golf club," he said.

"The benefits to the golf club are quite significant. The club has a major issue with water - well lack of.  It can not survive long-term drawing down on the water."

He said the development would bring in $18 million for the club, and the homes would also increase activity and membership, and enable the club to increase playability and presentation of the golf course.

"The club’s not doing this because it wants to suddenly become a retirement village, it’s doing it to provide a future and sustain the club for the future."

The news comes as another golf club at Gold Creek faces angry opposition from residents over plans to carve off 49 hectares of the 88-hectare golf course for redevelopment.