Bendigo's first mosque appears likely to go ahead after a Victorian court refused an appeal against its planning approval.

Bendigo residents Julie Hoskin and Kathleen Howard were seeking leave to appeal against the Victorian Civil and Administrative Tribunal's (VCAT) decision to uphold the local council's planning approval for the mosque in August.

But the Victorian Appeals Court today refused their last bid to stop the project.

The pair had argued VCAT and the Greater Bendigo City Council failed in their legal obligations to fully consider the "social effect" of the mosque.

But the court ruled that was not the case.

"The Court of Appeal held that the Charter of Human Rights and Responsibilities Act 2006 protects freedom of religion such that the mere practice of religious worship cannot itself be considered an adverse 'social effect'," a summary of the judgment said.

The Court of Appeal held that the human rights of the proposed users of the mosque were relevant to the making of the decision.

"In the absence of any objective, concrete evidence substantiating the adverse social effects the objectors submitted the mosque could have, the tribunal acted according to law in giving the objectors' concerns little weight."

Mosque objectors may take matter to High Court

Speaking after the decision, Ms Hoskin said she would seek more legal advice, but wanted to take the matter to the High Court.

In court, lawyers for the council and the developers of the mosque asked that Ms Hoskin and Ms Howard cover their legal costs.

Ms Hoskin said she had been crowdfunding to cover her own legal costs.

The Australian Islamic Mission applied in November 2013 to the Greater Bendigo City Council for the planning permit to build the mosque on Rowena St at East Bendigo.

It was first approved by the council in June 2014 and a series of appeals have since been launched.

Debate around the mosque led to controversy and some divisions within the town.

Large protests were held in the centre of Bendigo in October, with opposing groups facing off with each other.

Police were also called to a Bendigo council meeting in September, which was disrupted by anti-mosque protesters, and councillors had to be escorted out of the building.

The court heard 254 objections had been lodged by residents.

Islamic association thanks Bendigo for 'solidarity'

The groups behind the mosque thanked the local community for its "heart-warming" support.

"The Bendigo Islamic Association and The Australian Islamic Mission are very grateful for the support of the greater Bendigo community, including other faith groups, the Bendigo Council, Indigenous Australians, [political] leaders, Latrobe University, the business community and the Believe in Bendigo team throughout these appeals and wishes to thank them for their efforts," they said in a statement.

"The wider Bendigo community has shown resilience and solidarity and we are so appreciative of the heart-warming support we received.

"We would especially like to thank the Bendigo Council for holding on to the great Australian values of equality, freedom, democracy and a fair go for all."

Pro-mosque group Believe in Bendigo said on its Facebook page that the decision was "great positive news".

"In a nutshell, this is a huge step towards the mosque being built," it said.

"Hopefully we can put this ugly part of our history behind us and get on with supporting what will be a magnificent addition to our community and testament to modern Bendigo."

The group said the process had been fair and open, and the town welcomed people from all cultures and religions.