Owners of annual caravans at Daylesford's Jubilee Lake Holiday Park last month told The Advocate they were concerned ATPM was trying to squeeze them out with fee increases and a proposed major capital works program.

ATPM, which took over the lease for the park in 2008, has asked council to approve an extension to its lease boundary, which would pave the way for new cabins to be built along the edge of the oval.

In order to accommodate the cabins, ATPM would relinquish land set aside for camping.

Although the recommendation from council officers was to approve "in principle" the alterations, councillors last week passed a motion rejecting the alterations, after Holcombe Ward councillor Bill McClenaghan asked them to "take a hard line on this".

Cr McClenaghan said he suspected the proposed capital works were "all about less camping, higher rates, more profits for the operators and less and less of the Jubilee Lake that we love".

"To change the nature of the caravan park is to change Jubilee Lake as we know it.

"If we want to see the whole park gentrified, then we entertain the idea."

He also criticised ATPM for not providing a fire safety service at the park, which under the lease conditions it should have provided within the first 12 months.

"As far as I'm concerned fire safety is not negotiable," he said.

One of the two permanent residents of the park Barry McDonnell said the decision was "fantastic".

"This is a country park, it's not a suburbanite situation," he said.

Annual resident Judy Mcleod said council's decision had been "a great victory for Daylesford."

ATPM general manager John Tilton had said that ATPM's plans for the park were to keep it in its current form, with improvements to the electricity, water and firefighting.