Mick Gentleman said the cost of necessary infrastructure - including bridges, roads and utilities - to service the land, which would be constrained by the need to protect the environment and mitigate bushfire risks, meant development on the land was not cost effective.

"This is very clearly Zed Seselja's campaign to destroy the bush capital. And Elizabeth Lee is merely his puppet in the Legislative Assembly," Mr Gentleman said.

Opposition Leader Elizabeth Lee said it was "disgusting" for Mr Gentleman to call her a puppet and he needed to apologise for the non ministerial remark.

Meanwhile, the ACT government formally introduced new planning rules that will force builders to construct smaller houses, make way for larger backyards and require more trees in the capital's suburbs.

Mr Gentleman signed off on a change to the territory plan, which will require 30 per cent of large residential blocks are set aside as planting areas.

Site coverage must be no larger than 40 per cent of large blocks, 60 per cent of mid-sized blocks and 70 per cent of compact blocks.

All development in RZ1 and RZ2 areas - which covers most of Canberra's urban footprint - must have no less than 40 per cent of the site set aside for either communal open space and private open space.

Single residential blocks would need to have at least 15 per cent tree canopy coverage and high density developments would be required to have at least 20 per cent coverage.

Fresh debate on residential development west of the Murrumbidgee River at Tuggeranong was sparked by the Canberra Liberals on Thursday calling for a new feasibility study into residential development in the area, which has been at the centre of long-running discussions about the future of greenfield housing projects in Canberra.

Mr Gentleman said the ACT government had already completed studies that considered development at West Tuggeranong and across the Murrumbidgee River.

"We've seen the amount of work that needs to be done to protect the environment assets that are there," he said

"Of course we proposed this idea during a survey back in 2015. There were more than a thousand Canberrans opposed to the development of housing in West Tuggeranong, so we don't believe that there's any value in doing more study there."

Ms Lee said it was important to run another study of the area amid rapidly rising house prices.

"When you look at the fact we've got the highest rentals across the country, almost $200 above the national average, and the fact we've got a median house price over $1 million, it's incumbent on any government to do everything within its power to ensure that Canberrans are not being priced out of the market," Ms Lee said.

Labor and the Greens voted to amend the motion after a spirited debate, committing the government instead to "identifying suitable locations for additional medium density development in our inner suburbs".

In 2015, the ACT government advised the National Capital Authority there were significant economic and environmental constraints on development west of the Murrumbidgee River.

"Only a small proportion of the investigation area (around 726 [hectares]) could potentially be developed, and when factors like fire safety, water quality protection and topography are taken into account, this area is likely to be considerably less," the then director-general of the ACT's Environment and Planning Directorate, Dorte Ekelund, told the National Capital Authority.

The authority at the time was tasked with investigating how the area west of the Murrumbidgee River could be developed after the Liberal ACT senator, Zed Seselja, lobbied for the federal government to commission the authority to reconsider the use in the area.

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The letter, seen by The Canberra Times, said it would be important for the National Capital Authority and the ACT government work together should further assessments be made into residential development in the area.

In comments provided by the Environment and Planning Directorate to a draft assessment completed by the National Capital Authority, the ACT government noted steep areas on the site, potential threatened species and plants habitats and the potential impact on water quality in the Murrumbidgee River.

"The report notes that in terms of dwelling yield, population and cost per block, Murrumbidgee was ranked lower than 11 other areas examined in and around the ACT. This is based on a 2003 ACT government commissioned development capacity study," the comments said.

Mr Gentleman on Thursday said it was cheaper to build more housing within the existing footprint of Canberra's urban areas. A report to the ACT government said there could be double the number of homes along the proposed south side light rail route, it was revealed on Wednesday.

"Many big cities across the world are looking at density along corridors, where it's appropriate, and around town centres," he said.

Ms Lee said the ACT government needed to be up front with the community about its plans for the future of urban development in the city.

"Is the future they are pursuing, in building the light rail down the south side, a future where we're going to see high rises, high rises and high rises?" she said.

"That is what this Labor-Greens government needs to be upfront with the community about. Not to mention of course the community is still in the dark about the business case when it comes to the light rail project to be."

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