Sunshine council approved the construction of a home on land contaminated with arsenic and other heavy metals, instructing the developer to simply move the foundations a few metres away from the waste pit.

Documents obtained by The Age show the council and the Environment Protection Authority were aware in 1989 about the potential risk to residents from exposure to toxic waste after testing confirmed that a property in a St Albans housing estate was being built above the old Sunshine Landfills site.

The Denton Avenue site where rubbish was discovered. The council eventually bought the site back from the owner. Credit:Justin McManus

That landfill had been used during the 1960s and '70s to dump vast quantities of chemical, industrial, household and radioactive waste.

The revelations come as the EPA and Brimbank City Council brace for potential legal actions and compensation claims from dozens of current and past residents and businesses who have been kept in the dark about the existence of the former Sunshine Landfills and the potential risks they pose.