A parliamentary committee has backed plans for a $39 million Defence and private housing development in Weston but criticised Defence Housing Australia for failing to consult the nearby Orana School about the project.

The federal government wants to build 120 houses and units on an 8.3 hectare site bounded by Heyson Street and Unwin Place.

While not objecting to the development in principle, the Orana Steiner School had complained to Parliament's Public Works Committee about a failure by Defence Housing to consult with the school community.

In a report tabled in Parliament, the committee found the project signified value for money and should be carried out.

The committee commended Defence Housing for focusing on being a ''good neighbour'' but expressed concerns about the consultation undertaken for the Weston project.

''The Committee suggests that it would be to DHA's advantage to engage in initial notification to all near neighbours, followed by widespread and ongoing consultation, on all current and future projects, regardless of whether such neighbours might have anticipated concerns or not. A more inclusive approach may lead to more effective relationships with local stakeholders,'' the committee said in its report.

''The Committee was concerned about the quality and veracity of evidence provided by DHA relating to consultation for this project, particularly as subsequent correspondence from local stakeholders raised concerns that community consultation had not been adequate. Not contacting Orana was a serious omission in the consultation process.''

The Housing Authority told the committee that it had consulted a range of stakeholders about the development, including near neighbours to the site.