A Perth council that told a resident their house extension plans couldn't be approved unless they handed four metres of land back to the Crown for free has had the condition thrown out by the State Administrative Tribunal.

The Walcott Street block, bought by its new owners in 2016 after coming on the market for the first time in 100 years, is 673 square metres, with a rear driveway exiting out onto Bercove Lane.

The rear laneway at the centre of a State Administrative Tribunal fight between a local council and home owner. Credit:Google Maps

The City of Stirling told a Mount Lawley resident their application to extend their house in October would only be approved on the condition they "transferred a 2m x 2m truncation" to the Crown to allow a laneway along the north boundary of the property to be widened.

The council argued the land would need to be ceded because the owners were proposing to build a new carport which would increase traffic and require changes to the laneway.