A rescission motion moved by Labor and supported by Greens, independents and one Liberal, Joy Clayton, was defeated on the vote of the mayor, Sally Betts.

The residents now plan a concerted campaign which will target the local federal member - Prime Minister Malcolm Turnbull  - during the looming Federal election.

Despite Cr Betts calling a meeting at 8am on Saturday, angry Bondi residents crowded into the council chambers to boo and heckle as the Liberal majority first gagged the debate and then voted down a rescission motion. The motion would have reversed a decision to lodge a development application for re-development of the pavilion. That decision was taken two weeks ago, amid equally torrid scenes at the council.

Thompson, a longtime resident of Bondi, was too ill to attend, but in a video urged the council to change its position.

"Bondi Beach is one of the great icons, and Bondi Pavilion belongs to all along with the beach."

"It belongs to us. Get your hands off the Bondi Pavilion. It's our community centre. It's ours!" he said

The residents argue the plans will lead to a loss of community space, because part of the plan involves putting cafes and restaurants on the first floor of the art deco building - an area that is currently used by the community. The first floor would afford panoramic views over the iconic Bondi Beach but residents say it amounts to a privatisation, as the public would no longer be able to access the top floor without paying for a meal.

Cr Betts said it is " absolutely untrue" that there would be a loss of public space, but she refused at the last meeting to give an undertaking that the public would still be able to access the first floor veranda under her plan.

Labor Councillor Paula Masselos said the state government guidelines for councils in the lead-up to council mergers were being breached by committing to such a large project which would involve spending 30 per cent of Waverley's annual budget on a single project.

Julian Knowles, a music professor, said there was overwhelming community opposition to the plan, as evidenced by 750 submissions against the proposal.

"To approve this proposal is tantamount to saying that the community consultation is a sham," he said.

He said the council's failure to listen to the community had led to speculation that developer interests were behind the push for the redevelopment.

An angry Cr Betts said: "I would really suggest that if you have any thought that there is something illegal in this process, then report it to the general manager."

Labor Councillor John Wakefield accused the Liberals of illegally caucusing and voting as a bloc on what amounted to a development project. He said a vote on sending the project to the next stage - a formal DA - was a breach of the rules against caucusing on development proposals.

Cr Betts, who is advocating the project, argues that the building is in need of a heritage upgrade and that her plan will give the community better tourist facilities, a new theatre and make the council-owned building more viable.

But she is meeting strong resistance from local residents who regard the pavilion as an unofficial town hall and community centre. Twenty years ago residents fought off a similar proposal when the council was controlled by the Markhams. The residents agree the Bondi Pavilion needs renovating but they oppose the mayor's plans.