The Yass Valley Council has now called a meeting of planning authorities in NSW and the ACT this month to persuade NSW to change its mind, describing the buffer as “an essential element” of its new settlement strategy.

The council has been trying to impose a 20-year no-development zone at the border, something it says would prevent ribbon development up the Barton Highway and preserve the separate identities of Yass and Canberra. The Yass council is concentrating on subdivisions around Yass and Murrumbateman, and has also approved a big housing development on the border at Ginninderry.

Ginninderry is exempt from the proposed 5 kilometre buffer zone, which opponents argue gives the housing estate an unfair advantage as the only allowed cross-border development. Ginninderry is a joint venture between the Corkhill brothers and the ACT government, which supports the buffer.

But landowners at the border have been vehemently opposed. They say the buffer would devalue their land, would put paid to plans for subdivision, and makes no sense given the ability to feed directly into Canberra’s public transport and infrastructure.

Now NSW Planning has called a halt on the plan, telling the Yass council that it would impact “the expectations of existing landowners and businesses" and restrict the right kind of development.

A planning executive director, Monica Gibson, called on the council to adopt "a more holistic approach to cross-border planning issues".

Landowners welcome the NSW stance, but still fear for their land, given the Yass council is fighting back.

Landowner Arnold Dekker, who runs a 16 hectare hobby farm in the zone, said the buffer was arbitrary, unexplained and lacked vision.

The 300 landowners in the area recognised the development pressures, but rather than have the land locked up for 20 years, they wanted a clear vision and plan.

Mr Dekker is an environmental scientist and consultant who has set aside 6.5 hectares of his block for native vegetation with no plans to subdivide.

But the proposal to halt housing development at the border was unique to this part of Canberra, and entirely artificial, he said.

"If there's a farmer here with 1000 hectares, the smallest they would be allowed to subdivide would be 80 hectares and who could manage 80 hectares? I couldn't. Why does it have to be 80 hectares when it's a 400 square metre block across the border," he said.

Landowner Bill Ginn fears the ACT might eventually try to have the northern border shifted, as it was doing at Ginninderry, and resume the land itself.

Mr Ginn said rather than restricting new housing to Yass and Murrumbateman, it would make better economic, social and environmental sense to allow it along the border.

It would offer an option for young families who couldn't afford to buy in Canberra and didn't want to live in an apartment.

“Canberra is running out of land. They’ve had a wave of development going out to the border and now it’s washing back into the city and they’re doing urban infill. But nobody wants it,” he said.

"Every major city has a lower density peri-urban area on the outskirts. Why can't the north of Canberra be a rural residential peri-urban area as well?"

As for the Yass council's concern about urban sprawl, it was allowing just that by approving the Ginninderry housing development in west Belconnen, which crossed the border.

Yass council's director of planning, Chris Berry, said the council would set about convincing NSW to change its mind so it could have the buffer in place within five years.

NSW had taken a "fairly narrow view" about the meaning of transition zone, but the Yass council's view was much broader, and the details of what would and would not be allowed were yet to be worked out, he said.

“Part of our argument [to NSW] is you are rejecting something that we haven’t even written, you might actually like what we write,” he said.

Carving up rural land into smaller lots compromised the ability of people to make a living off the land, and rural residential lots were not a good way to manage land, also putting pressure on the council's ability to pay for services and roads to spread-out properties.

A report to the Yass council said the buffer zone “may have been too controversial" for the NSW planning department given the level of opposition, but it would send “a very clear message regarding urban development”.