The battle to save critically endangered woodland in Sydney's west has been reinvigorated after the state government failed to sell the site at auction on Tuesday.

The three hectare pocket of Cumberland Plain Woodland in Doonside was set to be sold for housing despite a nearly four year campaign by the local council and residents to preserve the land.

Blacktown Mayor Councillor Stephen Bali with Doonside residents protesting to keep the Cumberland Plain Woodland.

The Department of Education and Training owns the site but moved to sell it to developers when it was no longer needed for a new school.

The land is currently zoned for light density residential and the auction brochure promoted it as vacant and ready to be subdivided into about 50 homes.