Foreign governments sitting on valuable Commonwealth land, sometimes for decades, in Canberra's diplomatic dress circle will be told to use it or lose it.
Planners from the National Capital Authority are planning to tell embassies in Canberra's inner south that they can no longer leave land idle while other nation's clamour for spots in the diplomatic quarter.
In one case, Pakistan has recently built a consulate on land that it leased 54 years ago.
The authority says it is simply waiting for Foreign Minister Julie Bishop and Prime Minister Tony Abbott to give the go-ahead for the get-tough policy.
It is understood the Australian Government's patience has run out with several other nations, including Russia, over valuable land held on diplomatic leases but left empty.
Prime consular spots in sought-after suburbs around Parliament House have been sewn up for decades and nations who want to build new embassies have been sent to unfashionable O'Malley, six kilometres to the south.
The authority backed down last year, in the face of a vociferous campaign by Yarralumla locals, from a plan to assign land on Stirling Ridge, overlooking Lake Burley Griffin, for new embassies.
NCA official Alison Walker-Kaye told a Parliamentary Committee on Thursday that empty plots held on diplomatic leases in prime central locations would no longer be tolerated.
"One of the concerns that we have is that if they are not at the point where they are starting development now, then they at least give us a timeframe for commencing construction," Ms Walker-Kaye.
"A number of the diplomatic missions that have been sitting on sites for a long time will be approached, will be given a timeframe in which they need to commence construction or we will be potentially offering those sites to other diplomatic missions."
But after several reviews into the messy state of Canberra's consular leasing arrangements, the NCA said the political decisions to implement the reviews were still pending.
"There is a diplomatic leasing review underway and the government is yet to take a position on that," Ms Walker-Kaye
"When a decision has been made on that, we will be able to start leasing out a number of sites.
"But we can't take that step until we have a government position on the new leasing arrangements."
"We are waiting for a decision from the Foreign Minister and the Prime Ministers' Office at the moment."
Canberra MP Gai Brodtmann, who lives in Yarralumla and was a key player in the anti-embassy push from the suburb, told the committee hearing that she believed Foreign Affairs had overestimated the demand for new embassies.
"They've based it on a past when there was a lot of activity in terms of new nations and I think that it will quieten down in the future," Ms Brodtmann said.