A Brisbane couple living in a tiny house on wheels has won the right to keep their home in the backyard of an inner city property.

In a landmark decision, the Queensland Building and Development Dispute Resolution Committee ruled tiny homes with wheels should be treated like caravans and thus do not require a building permit.

Lara Nobel and Andrew Carter were facing the prospect of having to move following a complaint from a neighbour and a decision by the Brisbane City Council that their tiny home required a building permit to stay on site.

"It's not a fixed structure so you can't get a building approval for it," Ms Nobel said.

The pint-sized house, measuring a compact 18 square metres of floor space, comes with a self-composting toilet and a demountable deck — all of which can be moved within a few hours as it sits on a registered trailer.

The couple built and designed their home, and have been living at their current address for about seven months.

Lara Noble, Andrew Carter and their daughter Charli in their tiny house. ( ABC News: Andree Withey )

A month ago, they were joined by baby daughter, Charlie.

Mr Carter said it was a huge relief to know they could stay.

"This is one of the very few ways we can achieve home ownership anywhere near the city in a way that suits us," he said.

ESC Consulting environmental planner Rikki Pieters, who helped the couple with their appeal, said the decision was a significant win for this type of housing model.

"If you required the tiny house on wheels to have a building permit, basically you would be attaching that dwelling to the land and you would need to go through the planning process similar to if it was a granny flat or a secondary dwelling," she said.

Brisbane may soon change the rules

But there is still a legal hitch — in Queensland it is not always legal to live inside a caravan in a backyard.

"On the Gold Coast they prohibit it, in Moreton Bay Regional Council you can do it but there are a lot of rules that you need to follow," Ms Pieters said.

The couple's 18-square-metres house has a self-composting toilet and demountable deck. ( ABC News: Andree Withey )

On the Sunshine Coast a permit is required for anyone wanting to live in a caravan in a backyard beyond four weeks in any calendar year.

While living in backyard caravans is currently legal in Brisbane, that could soon change.

Lord Mayor Graham Quirk said the situation would be reviewed as the regulations needed to be uniform on tiny homes.

"I don't think we want to see these splattered all over the city, but nonetheless it provides an opportunity if people are trying to get into a first home ownership situation. It provides them with a stepping stone, so to speak," he said.

Valerie Bares from ESC Consulting said the tiny housing model potentially had a big future.

"The State Government has released its regional plan and wants to increase density and this is a great option," she said.