But Darebin Council, which recently rejected a request by the market's owners and developers Salta Properties and Medich Corporation to amend planning conditions to facilitate towers up to 28 levels, said there was nothing to stop the project proceeding.

The standoff has effectively stalled one of the largest proposed building projects in Melbourne's northern suburbs, which was expected to create 315 construction jobs and ongoing employment for another 770 when complete.

Salta Properties managing director Sam Tarascio said the development partners were "frustrated" by the council's refusal to advertise proposed amendments to planning conditions, which had limited community feedback on the plans.

"They are effectively blocking us from doing that and we find that to be a very unusual way of going about planning … this is not a proposal that has been whacked together quickly," he said.

The market's overhaul, while not yet finalised, could include a multi-deck carpark behind the row of shops facing High Street with an apartment building at each end.

Four other towers up to 28 levels may be built on the western edge of the site next to the Preston railway station.

At ground-level the market would be covered by a roof deck with another seven apartment buildings above, drawings show.

The amendment requested by the developers would remove VCAT appeal rights against towers up to 28-storeys, which is far more than the council's preferred 10-storey height limit, Darebin assets and business services director Steve Hamilton said.

"They can still put any planning application through. There's really nothing that council is holding up at all," he said.

Mr Tarascio said the popular food and vegetable market would operate as normal during the complex, multi-staged development which may take between five and 10 years to complete.

"The strategy we want to adopt is to effectively leave the market in its current location but gradually move through it and either rebuild or refurbish the market as necessary in stages," Mr Tarascio said.

One market trader, who did not want to be named, said businesses were frustrated at being "in limbo" and not knowing what was going on.

Leases were only being reissued on short terms which made it uncertain for traders and difficult to get bank loans, they said.

The nearest tall building to the market is the recently-sold Bell City hotel complex on Bell Street where a 12-storey building was approved. Similar size apartment towers at two sites on the High Street and Plenty Road junction have been given the nod.

Mr Tarascio said the market's location was a principal activity centre and should encourage larger developments.