At the same time, former Shellharbour councillors sacked in July called for the city council's general manager Brian Weir to be held to account.

Mr Weir announced on Thursday that developers Australand had deferred work on the planned marina at Shell Cove due to the downturn in the housing market.

Speaking from Edinburgh yesterday, former mayor David Hamilton described the announcement as "reprehensible".

"Six months ago we came to an agreement (that Australand) were allowed to move into the shopping side of things and everything was okay then," Mr Hamilton said.

"We also have a general manager who is getting $30,000 a year to keep council fully informed on the position of the marina.

"People have invested their whole lives in property in Shell Cove believing the marina will happen."

Former councillor and Shell Cove resident Geoff Rose said people had been badly let down.

"I feel the council should not be involved in development ... and the general manager should resign.

"But the big question I want answered is where has all the money gone?"

Former colleague Tom Hawker said councillors were never informed of the potential of the marina not going ahead.

"I am very surprised, but also very concerned for the residents of Shellharbour City.

"Was the general manager aware of this? I can't believe all this has happened since July 9.

"Bear in mind he is being paid an allowance so he should have known what was going on."

Mr Weir said the allowance he was paid was to "plan and develop" Shell Cove and was completely separate to his job as general manager.

"To say it is an allowance for keeping councillors informed is a totally incorrect statement."

Mr Weir said councillors were kept informed in quarterly reports, the last tabled in February.