The company behind a $1.4 billion bid to build a major commercial project in a protected wetland has withdrawn its application after the federal environment minister indicated she would knock it back. 

The controversial Toondah Harbour development proposal at Moreton Bay included 3,000 apartments, a 400-berth marina and a hotel. 

Earlier this month, Tanya Plibersek released an interim decision that found removing 58.7 hectares from the internationally protected wetland was an "unacceptable impact".

She also found it would affect threatened and migratory animals, including loggerhead and green turtles, dugongs and dolphins. 

Walker Corporation was given 10 business days to respond. 

In a statement today, the company said the decision to withdraw the application would give it time to consider the government's report, and the viability of an alternate proposal. 

"Walker Corporation has been on a long journey with our partners, the Redland City Council and the Queensland government, to deliver a world class vision for a revitalised Toondah Harbour," it said.

"We respect the minister’s opinion that she does not believe the project in its current form provides the protections for the environment and we need the appropriate amount of time to understand and address those concerns, to satisfy the government’s reasonable, high environmental standards."

Responding to the announcement, Ms Plibersek said Walker's withdrawal meant the project “will not go ahead”.

But she said it "should never have got this far", and could have been stopped by then-environment minister Josh Frydenberg when it was referred to him in 2018. 

"Huge amounts of difficulties, delay and expense could have been avoided if he had done his job and said that this project was 'clearly unacceptable' and could never be approved under federal environment law," Ms Plibersek said in a statement. 

Don Brown, the state member for Capalaba, said the withdrawal was unsurprising.

The Labor MP had supported its application. 

"For me, it was expected after the strong response from the federal minister," he said. 

Greens MP Michael Berkman said it was a "huge win for the community, wildlife and wetlands".

"Queensland Labor needs to scrap the Priority Development Area over the site now and commit to fix the ferry terminal with no private development," he wrote on social media.