The decision to approve James Packer's $2 billion casino and apartment complex at Barangaroo is to be contested in court after a community group lodged papers alleging the approval was invalid.

The group is claiming the Planning Assessment Commission, which approved the project and associated land use changes at Barangaroo in June, made fundamental errors in the way it considered the development.

Artist's impression of Crown Resorts' proposed $2 billion casino at Sydney's Barangaroo precinct. Credit:Crown Resorts

For Mr Packer and Crown Resorts the legal action looms, at least, as another delay to the signature development.

In deciding whether to approve the controversial tower, the PAC took into account an amendment to the Casino Control Act, passed in 2013, which allowed a casino to be built near the planned foreshore in the southern section of Barangaroo.