Developers of a new housing estate in suburban Melbourne are only targeting Islamic families in what has been described as one of Australia's biggest faith-based developments.

Iqra Village, the residential project at Melton South in Melbourne's west, will be divided into 75 lots and marketed towards South Asian migrants.

There are also plans to build a mosque at the centre of the neighbourhood where two houses have already been built.

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The new suburban housing estate called Iqra Village at Melton South in Melbourne's west will be divided into 75 lots and marketed towards Islamic South Asian migrants

The vacant block of land is just a few kilometres from where Reclaim Australia protesters staged a violent rally last year over Islamic migration.

Australian Federation of Islamic Councils treasurer Keysar Trad told Nine's A Current Affair that Muslims may want to live in the estate to be free of discrimination and misunderstanding.

'This particular venture is an indication there's a feeling out there that there's perhaps less acceptance of Muslims,' he said.

'A project of this nature will allow people to be able to develop a local place of worship or a local school without too many objections from neighbours. They won't be getting in anybody's way, it's something within their local community.

There are also plans to build a mosque at the centre of the neighbourhood in Melbourne's west where two houses have already been built

The residential project at Melton South in Melbourne's west will be divided into 75 lots and marketed towards Muslim families

The vacant block of land is just a few kilometres from where Reclaim Australia protesters (pictured) staged a violent rally last year over Islamic migration

'We've always encouraged our community to live among mainstream society and to build friendships and promote understanding and awareness.'

While the neighbourhood is being marketed towards Islamic families, it is not a Muslim-only estate.

A spokesperson for Melton City Council said permits had been issued for medium density housing.

'There was no reference in the planning applications that the development was a faith-based community development,' the council said in a statement.

'Subdivision works have been completed but at this stage only two dwellings have been constructed.

'Melton City Council continues to build an inclusive community that embraces and values cultural diversity.'

Australian Federation of Islamic Councils treasurer Keysar Trad told Nine's A Current Affair that Muslims may want to live in the estate to be free of discrimination and misunderstanding