Colin Barnett is concerned about the Abbott Government's plan to sell part of a village for Special Air Service Regiment families and that two parks dedicated to fallen soldiers could be lost.
The West Australian revealed last month that the Federal Government planned to sell a quarter of Swanbourne's Seaward Village to make way for luxury homes.
The millions of dollars raised would be used to upgrade housing for SAS families and build new units for single soldiers.
But the plan raised fears among SAS members that the village would be less secure.
The redevelopment would probably require two parks named after SAS members killed in Vietnam to be demolished.
The parks are owned by the State Government, meaning it could cause a serious headache for those agitating for the sell-off.
The parks are named after Cpl Ronald Arthur Harris and Sgt George Baines.
The Premier, whose electorate takes in the SAS barracks, said he was concerned the redevelopment could reduce security for soldiers and families.
"I share concerns for the privacy and safety of Defence families," he said.
"I don't believe mixing civilian housing with defence personnel makes good sense."
The push for the redevelopment has puzzled many.
It is understood about 25 per cent of the homes likely to be demolished under the Abbott Government plan were only renovated in 2011.
There are also questions about whether the proposal is connected to the Federal Government's plan to privatise Defence Housing Australia, which could be announced in the May Budget.
Seaward Village, which adjoins the SAS's Campbell Barracks, is on prime beachfront land.
The Federal Government says it will begin work on the site in 2017, providing it wins needed State and council approvals.
The sale of land for private homes will not cover the entire cost of the development and the Government will have to tip in another $25 million. There are 153 Defence Housing Australia homes in Seaward Village.
The Government says there will be 165 Defence homes and apartments available for SAS families and unmarried personnel in the village by the time the development is complete in 2020.
The blocks for Defence homes will be smaller than they are now but will be bigger than standard Defence blocks in other States.
Special Operations Commander Maj-Gen. Jeff Sengelman will oversee a security assessment of the redevelopment.
The Federal Government is promising a buffer between the new civilian development and Seaward Village.