Plans to develop more than 3000 homes in buildings up to 18 storeys high at the Showground station precinct in Sydney's north-west have been thwarted after an independent panel rejected a controversial bid to rezone parts of the site.

The Hills Shire Council had previously knocked back Showground Corporation's attempt to get the local environment plan for the precinct changed to allow higher-density development at two sites.

Thousands of dwellings are planned for the Showground station precinct in Castle Hill.

Under the corporation's planning proposal, two prominent sites at the development would be filled with up to 3040 dwellings, or 837 more homes than are allowed under existing planning controls.

The proposal would also result in the maximum building height at those sites increasing from 12 to 18 storeys.