PEOPLE have slammed a new development in Melbourne, calling it “a ghetto of Islam”.

A block in Melton South will be transformed into housing targeted at the Islamic community, with 75 separate lots and a mosque built in the middle of the neighbourhood.

It’s called Iqra Village and is said to become Victoria’s largest faith-based housing.

The development, which featured on A Current Affair on Monday night, sparked a lot of outrage on social media and there were myriad racist comments, with some even saying it shouldn’t be allowed.

“What a joke. If Australians build an Australian only suburb, we would all be racists,” a comment on Twitter said.

@ACurrentAffair9 haven't these town planers learnt anything. Putting all housing commission together worked wonders to. #9ACA — Bradley Sharp (@SharpV8fan) May 23, 2016

An anti-Islamic Facebook group is also encouraging people to boycott this housing development, which will be built near last November’s riots, caused by anti-Islamic groups who were against Islamic schools and mosques.

But the development is not a Muslim-only community and it will certainly not be gated.

While it will be rich with Islamic culture, it’s only targeted at Muslim families who might want to live around others with the same values.

#ACA Melton Sth is doing an all Muslim housing development with mosque. There's an all Indian one nearby. So much for cultural integration. — Allan Kleiman (@allankmelb) May 23, 2016

Australian Federation of Islamic Councils treasurer Keysar Trad told A Current Affair Muslims were just creating a neighbourhood free of discrimination and free of misunderstanding.

“This particular venture is an indication there’s a feeling out there that there’s perhaps less acceptance of Muslims,” he said.

“A project of this nature will allow people to be able to develop a local place of worship or a local school without too many objections from neighbours. They won’t be getting in anybody’s way, it’s something within their local community.

“We’ve always encouraged our community to live among mainstream society and to build friendships and promote understanding and awareness.”

Town planner Bill Kusznirczuk told A Current Affair he did not have a problem with it.

“Just make sure that we are planning these areas properly,” he said.

“Australia has found that its settlement post war has been a mix of a range of ethnic cultures and that’s a good thing, it makes for the perfect minestrone from an urban planning point of view.”

Mr Kusznirczuk encouraged the developments, as long as they remained open to all in the community.

“Make sure it’s inclusive make sure this particular parcel of land joins and isn’t segregated from others,” he said.

“Plan it well and there will be good outcomes for people who are living there.”

Another development called Indian Junction is also underway on the outskirts of Melbourne in Tarneit.

It is designed for the Indian community and will give residents access to Indian supermarkets, health centres and aged care homes.

Developer Sunil Kumar told A Current Affair anybody could live in the neighbourhood if they wanted to.

Melton City Council said in a statement it would continue to build an inclusive community that embraced and valued cultural diversity.