Concerned resident Warren Bolton lodged an objection with the Victorian Civil and Administrative Tribunal following Hepburn Shire Council's decision to approve the application put in by well-known local restaurateur Alla Wolf Tasker.

The application was for a cafe and licensed premises that could serve alcohol from 10am to 11pm, seven days a week, and seat up to 80 patrons.

Hepburn Shire CEO Kaylene Conrick said VCAT last week issued an order that a permit to allow the operation be granted, affirming an earlier council decision made under delegation by its planning office.

"The new lease holders' vision for the former kiosk, which has sat unused for well over four years, can now be realised," Ms Conrick said.

"VCAT accepted council's argument that, with appropriate conditions, the amenity of the gardens would not be detrimentally affected by the proposal."

The VCAT review centred on the proposed hours of operation, patron numbers and car parking.

The senior VCAT member who decided the matter found the hours of operation and patron numbers were not issues of concern, and car parking was adequate for the proposed use due to demand variations for parking spaces over different periods of the day.

Council had placed a number of conditions on the permit to ensure residents and visitors alike could continue to enjoy all aspects of the Wombat Hill Gardens.

"We do recognise the need to balance the existing amenity with the new experience the licensed cafe will offer to visitors seeking to relax within the surrounds of these iconic gardens," Ms Conrick said.

"The granting of this permit heralds an exciting new phase in the life of these wonderful gardens."

During the its consultation process in April, the council received four objections to the development.

One of the objectors, Russell Wilkinson, said he still believed it had the "potential to be a totally inappropriate development for a heritage listed gardens".

"It's over-commercialisation of a site that shouldn't be commercialised."

In handing down its ruling, VCAT stated the "development was a suitable addition to the amenities available to users of the parks and was unlikely to have any unacceptable off-site amenity."

The Lake House was chosen as the tenderer for the residence and kiosk in the Wombat Hill Gardens more than a year ago.