The downfall of the state’s biggest housing project will not have wide-ranging consequences for the planning system as a whole, the NSW planning minister has said.

Kristina Keneally told the Land and Environment Court that the land swap process that saw the Huntlee New Town development come to an abrupt halt was only used by previous planning minister Frank Sartor on a few occasions.

Keneally said that she believed land swaps in the Lower Hunter region had been used five or six times.

It was used on a “very limited” occasions, she said, and “does not have wide-ranging effects on the planning system as a whole”.

Keneally said that she had never personally signed a memorandum of understanding, deed or agreement.

LWP Property Group pulled back from the proposed Huntlee new town project after the group and Keneally admitted that the development approval breached planning laws.

The group’s managing director, Danny Murphy, said: "Recent legal developments have been disappointing and frustrating, especially considering Huntlee has worked closely with both the NSW government and the local community to address any issues of concern."

According to Murphy, the developer had acted in good faith to deliver a proposal that would generate new jobs, homes and economic growth for the Hunter region.

"It also included comprehensive community consultation and a significant revision of the original proposal that led to the NSW government approval in February and then conditional approval from the federal department of the environment in July," he said.