But the National Capital Authority has promised buildings on the now vacant block – soon to be sold by the Land Development Agency – will be forbidden from overlooking the neighbouring primary school and the National Jewish Memorial Centre.

The authority's chief executive Malcolm Snow told Inner South Canberra Community Council president Gary Kent in a recent letter that the ACT government had requested the rezoning of the block on the corner of State Circle and Canberra Avenue from "community facility" to "mixed use".

"[Our] investigation found that Inner South Canberra has a generous supply of land zoned for community facility use compared to other parts of Canberra," he said.

"In addition, the investigation concluded that the site is not ideal for community facilities for a number of reasons, including its adjacency to a major intersection, and proximity to arterial roads and associated adverse impacts of noise and safety."

But Mr Kent, who had written to request the zoning backdown on September 23 in a joint letter with neighbouring property users, said the influx of residents or hotel guests at a commercial development on the site would be inappropriate next door to a childcare centre and school, which could need to expand in future.

"We're not reassured by that [Snow reply] at all," he said.

LDA acting chief executive Ben Ponton said the land would be offered for sale in the first half of next year, and noted that the zone change allowed for any combination of residential, diplomatic mission or commercial accommodation development.

The September 23 letter stated the opponents were "alarmed" by the listing of 168 dwellings as an option for the block in this year's ACT government Indicative Land Release Program.

Mr Kent's letter said the opponents understood six-storey buildings may be permissible on the Canberra Avenue-facing side, but the indicative designs on the precinct code show four storeys, and three storeys for a building facing State Circle.

A National Capital Authority spokeswoman said the topography of the site meant an exact number of permissible storeys was uncertain, and it "may be possible" for a five-storey building to be built.

The ACT Jewish Community, an adjoining neighbour, said in the letter they had "significant" security concerns.

The Jewish community recently received NCA planning approval for a $6 million redevelopment, with security upgrades to include a 60-centimetre high concrete wall with an additional 1.9-metre fence on top of it surrounding most of their centre.

Mr Snow said the "no-overlooking" restrictions would be described in LDA sales documents and enforced by the NCA, which is responsible for all works approval on the site. The spokeswoman said design controls would ensure the privacy and security of the users of the adjacent development.

Community Services #1 chief executive Amanda Tobler, whose business owns Forrest Early Childhood Centre, said she was disappointed the calls for a return to the community zoning had not been accepted.

"Our preference is to continue to utilise that space for a community-based service, a community connection association, it might be a church, I don't know," she said.

Ms Tobler said the company successfully ran childcare centres elsewhere in Canberra at the bottom of high-rise buildings, but it was important the outdoor areas at the Forrest centre maintained their access to natural light and natural trees.

"We don't want a building that is overshadowing the playground area, because that is where children engage and learn about the world," she said.

The precinct code stated existing trees to the block's west should be retained and additional planting should be used to ensure visual privacy for the childcare centre "without compromising solar gain".