The council refused the application for a building permit on June 15 following objections from neighbouring residents.

In November, VCAT upheld the decision to reject an application to build on the corner of Young and Lerderderg streets in Bacchus Marsh, citing concerns the development would not be in keeping with the neighbourhood's older, single-storey houses.

Applicant Steven Keith, director of Melbourne Building Group, has now altered the facade and building materials and decreased the size of the house, from a three-bedroom double-storey design to a two-bedroom double-storey townhouse.

"We've tried to tick all of the boxes VCAT has picked on."

Mr Keith said he would not have bought the property had he known the council would introduce heritage guidelines.

Period-style architecture prevails in the street, which has mainly single-storey Edwardian and mid-Victorian homes or California bungalows.

East Moorabool ward's Cr Michael Tudball said he expected any building design in the street to honour its heritage.

"If there's one place in all of Moorabool that has a particular character it's Lerderderg Street.

"Neighbourhood character is really hard to define in a planning scheme, but this is one place you can define it just by looking at it."

Cr Tudball said if the plan did not respect the existing character he would not support it.

But Mr Keith argued the design was in keeping with the street's aesthetics. "Some people see lines and plans and don't see the vision of what we see."

A council spokesman confirmed a new application had been received.

"Council must accept and consider any new application even if a previous application was refused at VCAT. The proposal is currently on public notice and has received objections."

The matter is likely to be considered at council's March 21 meeting.

-with Nick Toscano