New embassies are unlikely to be built in Stirling Park after a parliamentary inquiry backed objections of residents to the controversial proposal, and criticised the ad hoc approach to allocating land for new missions.
The committee calls on the National Capital Authority to withdraw the plan build nine embassies in the park.
An authority spokeswoman said the plan has been put on hold pending the outcome of the inquiry and the government's subsequent response to the report.
Coincidentally, the residents who put the heat on the authority may suffer blowback on Saturday when, weather permitting, the authority conducts a controlled burn at Stirling Ridge to reduce fuel load.
The burn will be undertaken in the southern corner of the area, near Empire Circuit and Forster Crescent, in Yarralumla.
The joint standing committee on the national capital and external territories held the inquiry into the allocation of land to diplomatic missions in the ACT after a row erupted over the proposal.
Residents said Stirling Park and its popular Stirling Ridge, even though owned by the authority, should be left as open space for all Canberra residents to enjoy.
Any new diplomatic enclave should be built in the greenfields area of Molongo rather than the established Stirling Park which was one of the last pieces of vacant land in the central area, they said.
The committee's report, released on Thursday, said residents were concerned the section of land was chosen not because it was the most suitable, but because it was the most readily available.
"The committee agrees that this is not the best criteria for assessment," the report says.
"The committee has been impressed with the level of planning and coordination inherent in the Washington model, and its substantial use of free market methods in the allocation of land to diplomatic missions."
The committee has recommended the development of a long term strategy for the allocation of land to diplomatic missions.
"This strategy would be developed in conjunction with the ACT Government and integrated with the National Capital and Territory Plans," it says.
"The strategy would forecast demand and supply, and establish a range of mechanisms for allocating land to diplomatic missions.
"The committee has also recommended that in deference to the development of this long term strategy, Draft Amendment 78 [for Stirling Park] be withdrawn."
Gai Brodtmann, the Member for Canberra who opposed to the development and a member of the committee, said she was very pleased with the report.
"I am particularly pleased it has acknowledged the need for a long term strategy for the management of the diplomatic estate and for a thorough review of the way land resources in O'Malley, Yarralumla and Deakin are currently being used for diplomatic purposes," she said.
"The committee report highlights there has been an ad hoc approach to the management of the diplomatic estate.
"We need to fill the vacant blocks in O'Malley, Yarralumla and Deakin."
The NCA spokeswoman said the authority recognised the importance of the issues considered by the committee and actively participated in the inquiry.
"We now must await the formal Government response but our initial reaction is that there is merit in having both a clear statement of Government policy and a long term planning instrument to guide future diplomatic development," she said.
The report's recommendations include:
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