In a bid to quell community anger about overcrowding, all Sydney councils can now ask to be exempt from new building codes that make it easier for homes to be subdivided.
After suspending the rules in Ryde and Canterbury-Bankstown earlier this week, Planning Minister Anthony Roberts has now opened the floor to other councils.
The code, which comes into effect in July, encourages homes to be subdivided into dual-occupancy dwellings.
But Mr Roberts said development was overtaking infrastructure in some areas, and putting too much pressure on roads, schools and hospitals.
Mr Roberts went even further in Ryde, where he suspended all proposals for new residential development while planning rules are reviewed.
It sparked calls from community groups for similar moratoriums to be placed on other areas of Sydney.
Mr Roberts said other councils may now apply for the code to be suspended while they change their planning laws to limit where medium-density housing can be built.
"I now wish to extend that offer to any other council who seeks a fix to their own Local Environment Plan," Mr Roberts said.
"If a suitable planning proposal is received by my department from any concerned council, I will defer the commencement of this code until such a time as their local plans can be rectified to meet the strategic intent of that council."
But Mr Roberts also defended the medium density code as "an excellent tool," arguing it was up to councils to change their planning rules to adapt it to their suburbs.
He said some councils like Sutherland had already thought carefully about which areas terraces and townhouses could be built under the code, and modified their rules accordingly.
On Wednesday, Canterbury-Bankstown Mayor Khal Asfour welcomed the move, saying the policy would change the way the suburbs looked and felt.
But Opposition planning spokesman Michael Daley said Mr Robert's offer was an embarrassing back down from a Government that has spent years pushing more medium density housing as a solution to Sydney's housing affordability woes.
"The people of Sydney have been saying that the planning system in Sydney is a mess, it's out of control and today that is official," Mr Daley said.
"This is no way to conduct strategic planning or planning policy in Australia's most populous and important city.
"Who's running the city now? It doesn't appear that anyone is."
