Caroline Schelle
(Australian Associated Press)

A luxury tourism development planned for a remote World Heritage area in Tasmania has fallen over after an environment group successfully challenged the decision.

The federal government’s decision in August 2018 to allow helicopter flights and huts on Lake Malbena at the Walls of Jerusalem National Park was overturned in the Federal Court on Tuesday.

Justice Debbie Mortimer ordered the decision made by then environment minister Josh Frydenberg’s delegate that the project was “not a controlled action” be set aside.

The delegate who made the decision at the time is current Environment Minister Melissa Price.

Wilderness Society Tasmania spokesman Tom Allen welcomed the news.

“It’s a pretty positive decision,” Mr Allen told AAP on Tuesday.

He said it had effectively put a stop to the plans that included huts, a communal building, walkways and helicopter flights.

But he said it called into question the way the state and federal governments made decisions around the environment.

The federal court judge also awarded costs to the Wilderness Society, to be paid in an agreed lump sum.

The project for the huts was given the tick of approval despite the National Parks and Wildlife Advisory Council – an independent body tasked with advising state and federal governments – advising against it.

Tasmanian federal independent MP Andrew Wilkie said the decision was a relief because the project didn’t satisfy sensible environmental and social criteria.

“We need to do better to protect our wilderness areas from inappropriate developments and this is a triumph of common sense,” the MP said.

The plan for the development was strongly supported by the state Liberal government.