However, it has still raised the ire of Wyndham landowners and lobby group Taxed Out. Under the changes, up to 90 per cent on landowners on Melbourne's fringe would not be required to pay, with those on properties with a dwelling on 10 hectares or less to be GAIC-free until development.

Properties between 0.41hectares and five hectares will now be exempt from tax on the sale of their land, unless it is being sub-divided or developed.

These were among a raft of resolutions announced last week after the dispute resolution committee of Parliament negotiated a bipartisan way forward for funding infrastructure in an expanded urban growth boundary. It comes after the original GAIC Bill was defeated in the Upper House in February.

Other changes include no listing of GAIC on land titles until sale, and staged payment plans to continue if a development is sold.

Planning Minister Justin Madden said it would offer peace of mind for small landowners. "Any GAIC liability is not triggered on the sale of land, which protects the interests of hobby farmers and people owning lifestyle properties. They [the amendments] ensure the contribution is targeted at developers or people acquiring land for development or subdivision."

Mr Madden said the government committed to spending 50 per cent of the tax revenue on delivering public transport infrastructure to growth areas. Opposition planning spokesman Matthew Guy said the Coalition still wanted developer contributions to be paid by those who develop the land - not by landowners.

Debate on the proposed amendments to the GAIC Bill will resume in the Upper House on May 25. Mr Madden said if it was passed, the government would re-introduce an amendment to expand Melbourne's Urban Growth Boundary, and put in acquire land for the proposed 15,000 hectare native grasslands reserve, the Regional Rail Link and the Outer Metropolitan Ring Road corridor.

Taxed Out chairman Michael Hocking said the GAIC was still grossly unfair.

"How can government justify charging one landowner over 10 ha a minimum $285,000 on the sale of their property, while a landowner with under 10 pays nothing," he said."We're disgusted by the Liberal Party's backflip on this legislation, particularly when they've supported our campaign over the last 15 months.

"One of our elderly members who owns an 11 hectare property wept when he found out about the changes - he's absolutely gutted."

Mr Hocking said the fairest way forward was for the government to adopt the New South Wales model where a growth tax is paid on development.