Redland city councillor for Birkdale Helen Murray started the campaign last September to have plans for 27 studio units and eight two-bedroom apartments at 26-36 Napier Street shelved.

"I am absolutely devastated with this loss," Cr Murray said.

"There is definitely not sufficient parking in adjacent streets as has been indicated (by the minister) and other land they have suggested we build a car park on is dedicated greenway, not to be opened up for development."

Transport Minister Rachel Nolan wrote to Cr Murray and residents who signed the petition last week, indicating that despite community consultation and submissions from residents and the council, the public housing would go ahead.

Ms Nolan repeated her earlier argument that the land was bought by the state in 2007 when it was zoned by the council for residential land, which was still the zoning.

"The director-general, Department of Communities, has reviewed the project having regard to all submissions received and determined that it is to proceed without changes to the plans and specifications," the letter said.

"An initial concept design has been prepared for the development of about 40 additional car parking spaces at the station, which would bring the new total to almost 170 parking spaces."

The minister also indicated that further public transport investment in the Redlands could be hastened if the council introduced a transport levy, like Brisbane, Sunshine Coast and Gold Coast councils have.

"If Redland City Council was to contribute the same level of funding per ratepayer as Brisbane, this would generate over $11 million in extra funding to spend on more public transport services and infrastructure," she said.

"The government would welcome any future contributions from Redland council to help improve public transport for residents in the Redlands region. Council contributions could be used for any number of projects including extra bus services, extra car parks or even more bike lockers at railway stations."