The ACT government is adamant no development is planned for the block on the corner of Streeton and Dixon drives.

But that has been met with scepticism by residents in the area, many of whom love to stop and pat the ponies, which they say add to the ambience and community feel of the neighbourhood.

The Weston Creek Community Council also believes the government is being heavy-handed for no good reason.

Celia Kneen, 69, has kept ponies and horses on the block for about 23 years, coming to an arrangement initially with ACT Forests to keep a pony there for her then seven-year-old severely-disabled daughter, Leonie.

Leonie is now aged 30 and Ms Kneen said the paddock and the ponies had helped to sustain her as she cared for her daughter over the decades.

"One of the main things it means to me is physical and mental health,'' Ms Kneen said.

"My first reaction to the termination notice was just shock and horror. It was just totally out of the blue.

"This small plot of land has been part of my life for around the last 23 years and it, the animals that I keep there, and the community connections arising from it have helped to sustain me through difficulties which I don't think the officers who made the decision to terminate the licence would even vaguely comprehend.''

Ms Kneen received the termination notice in April, asked to remove her animals by December 31.

The block in question is diagonally opposite the former Australian Federal Police site where the Village Building Company is constructing 242 dwellings.

The ACT government says Ms Kneen's licence had been revoked because the three horses were "overstocking'' the 1.4-hectare site and the land had been degraded as a result.

The government says Ms Kneen is not being removed to make way for developers.

"There is no development planned on this block,'' a statement said.

Planning Minister Mick Gentleman, in a letter to Ms Kneen, said grazing licences were routinely reviewed and granted for the management of fuel fire hazards, drought relief grazing or to enhance conservation values.

He said Ms Kneen's licence "has been identified as not being essential with regard to the above criteria''. Her termination date had been extended twice to accommodate her needs.

Mr Gentleman said the government was providing Ms Kneen with private horse agistment at a rate of $1.54 per week compared to other horse owners who paid more than $30 a week for agistment.

"It is unfortunate that unacceptable management of some rural grazing licences in the past has given you an expectation of continued occupation of this land for such a long period,'' Mr Gentleman wrote.

"However, this cannot justify the continuation of this situation.''

Ms Kneen said she spent about $50 a week on the block for agistment, carting water, weed control and fence maintenance. She did not understand why the government was now telling her she was paying too little.

"They tell me, 'You're not paying enough' Well, I pay what you send me an invoice for','' she said.

Ms Kneen said she was trying to improve conservation efforts, including protecting eastern long-necked turtles on the block.

The land is between Dixon Drive and Cotter Road, just south of the burgeoning suburbs of Molonglo, the closest being Wright, named after poet Judith Wright.

"I've been here in Canberra since 1976 and I loved it because it was the bush capital,'' Ms Kneen said.

"I think Judith Wright would love what I'm doing here much more than the suburb [she is named after].''

One Holder resident, who did not want to be named, said the ponies meant a lot to his family.

"These lovely animals have brought lots of joy and laughter to my two children and to many young children living in the area,'' he said.

"We enjoyed feeding them a couple of carrots in the evening when we are having a walk after dinner and the children absolutely love them.''

The man said he was worried about future traffic levels in the area, should the block be developed.

"Despite what they say they are going to do with the land, it is more likely than not there will be some development in the future. To us, this will certainly disturb the tranquillity of life in the bush capital,'' the resident said.

"The recent development work at the old AFP site in Weston is upsetting enough and we are certainly in fear that we are going to lose more and more open and green space.''

Weston Creek Community Council chair Tom Anderson said Ms Kneen's case was on the agenda for a meeting next week with Murrumbidgee Labor MLA Chris Steel.

"I fail to understand why they've terminated her licence,'' Mr Anderson said.

"It seems to me very heavy-handed without any good reason. And at a time when parks and gardens are finding it difficult to manage what they have, here is someone who is looking after land for them and has been doing so for more than 20 years.''

A spokesman for ACT Parks and Conservation said: "The removal of stock and cessation of the grazing licence will result in natural regeneration, allowing the condition of the land to improve. ACT Parks and Conservation will monitor it and undertaken further work as necessary''.