HAZELWOOD Pondage Caravan Park in Victoria is being turned into a day trip facility.
But Latrobe City Council says that from July it will offer a 72-hour permit zone for camping and recreational vehicles.
A community petition against the move has attracted more than 650 signatures.
Chief executive Gary Van Driel blamed the closure of Hazelwood Power Station, which meant the authority had been unable to secure an extension of the existing lease arrangements for the caravan park.
"Council's decision to transition the site to a day facility followed a consultation process with a number of key stakeholders," he explained.
"The Hazelwood Pondage Caravan Park has been a popular place to stay for a long time and we understand that this decision will be difficult for our permanent site holders.
"Many have a long history of holidaying at the park and no doubt have many special memories of their visits."
Mr Van Driel said the current site would be rehabilitated to include a maintained grassed area, picnic tables, car park, toilet block, jetty, barbecues and playground facilities.
"The area will provide for short-stay camping through a 72-hour permit zone as well as recreational vehicle stopping," he said.
"Both of these services will be at no charge to the community and ensure that the site can continue to be utilised by day trippers, boat users and occasional campers.
"The site will also continue to cater for boating and fishing enthusiasts who wish to camp on a short-term."