The ACT Government announced two weeks ago that it had reached an agreement with the park's owners, Consolidated Builders, to take over the park and give the company a different block of land.

The alternative block is on the corner of Narrabundah Lane and Jerrabomberra Avenue, and an Environment ACT survey in 2002 found it was home to colonies of the grassland earless dragon.

The small reptile, which grows up to 16cm long and lives in holes in native grassland, can only be found around Canberra and Queanbeyan. A similar sub-species lives around Cooma.

Any development which could have an impact on a matter of national environmental significance, such as an endangered species, must be referred to the Federal Government for approval.

Managing director of Consolidated Builders Josip Zivko has repeatedly refused to talk to the media since the land-swap agreement was reached.

His plans for the new site are not known, but Chief Minister Jon Stanhope said Mr Zivko told him during negotiations he wanted to establish a mobile home park on the site.

If the deal goes ahead, he will receive $1.5 million in compensation from the Government to account for the lack of caravan park infrastructure on the new site.

The negotiations with the Government began after Consolidated Builders bought the park from charity Koomarri for $2 million in February and then handed eviction notices to its 200 residents in May.

The ACT Government had originally sold the park to Koomarri in 2000 for $1, under the condition that it be run as a caravan park for five years.

A spokeswoman for ACT Environment Minister John Hargreaves said the existence of the grassland earless dragon was known to the parties during the negotiations.

"An environmental assessment was part of the process. It was something we considered from the earliest moment. Environment ACT was involved in the process.

"This is not news to us ... All of the parties involved in the land-swap agreement were aware development was subject to clearance under the federal Act.

"This is a 9.4ha block that does fall within the grassland earless dragon habitat, but it is not the majority of the habitat we are talking about. The habitat is over a 50ha block."

However, environment experts said any loss of habitat would have an impact on the species, especially as it had already lost some as a result of development at the airport, approved by the Federal Government.

A physiologist at the Australian National University, Paul Cooper, is part of a team working out how to save the grassland earless dragon and recover population numbers.

He said repeated destruction of the reptiles' habitat on a small scale was the reason why it had become endangered

"The recovery plan clearly states any habitat loss is quite serious now. It's been dying the death of 1000 cuts. What upsets me is the continued erosion of the habitat. The ACT and Federal Government are complicit in this.

"The Federal Government has given carte blanche to the airport for the same thing [development on habitat]. It's not under threat of extinction per se, but it's habitat is becoming less available to it. You can't keep doing this."

Geoff Robertson, of the Friends of Grasslands group, said he was disappointed the Government had chosen to give away land which was home to the species.

"The plan for this area was to put in place developments that wouldn't have a big impact on the land. If they were to build on that spot, it would be going back on the ACT Government's own efforts to protect the animals, and that is very disappointing.

Greens MLA Deb Foskey said the existence of the dragon on the block was another aspect to the problem created by Koomarri selling the park to Consolidated Builders.

"We know it would be a social disaster if the long-stay park was closed down. We now also know that developing this new block will cause permanent environmental harm. Unless some very careful work is done, it might have to be Consolidated Builders' unnecessary profits that have to go."