ABC

The Federal Government says environmental concerns have forced it to reject a proposal for a resort development on Great Keppel Island on the Great Barrier Reef.

Tower Holdings' proposal includes a 300-room hotel, a ferry terminal, retail village, golf course and sporting oval.

The developer had been confident the plan would get the green light from the Federal Government after receiving significant project status from the State Government earlier this year.

But Federal Environment Minister Peter Garrett today rejected the proposal.

Mr Garrett says the plan is unacceptable under international law because of the impact it would have on the world heritage area.

He says the huge-scale development would have unacceptable impacts on areas including coral communities, coastal wetlands and marine species.

He says the developer is welcome to submit a new proposal which would have a lower impact on the environment.