ONE of the biggest Islamic schools in Australia will be built in south-western Sydney after Bankstown City Council lost an appeal in the Land and Environment Court.

The decision will allow construction of a 1200-student primary and secondary school in Bass Hill, which has been fought by residents since the land was bought in 2006.

It is one of several applications for Islamic schools that have divided communities in NSW, leading to allegations that residents are using town planning arguments such as traffic to cloak racist sentiment.

Bankstown council first knocked back the proposal in 2007 after residents launched a campaign opposing the project.

The group behind the school, Al Amanah College, appealed against this decision. Last December, Senior Commissioner John Roseth of the court approved the plan to build the school on a 18,000 square metre site at Johnston Road. A child-care centre is also proposed.