The State Government would have to abandon a CSIRO-endorsed population cap at Coral Bay if it were to expand the settlement into a town or the "Rottnest of the Pilbara" under its coastal revitalisation policy.
A Cabinet sub-committee has been formed to draw up plans by the end of the year that could include "opening up" Coral Bay, the Abrolhos Islands and the south coast to tourism and residences.
The committee, headed by Deputy Premier Kim Hames, will permanently include the Planning, Tourism and Regional Development ministers and the Fisheries and Local Government ministers "as required".
The Shire of Carnarvon, which has municipal control over Coral Bay, and the State Opposition yesterday criticised the absence of the Environment Minister and questioned whether the committee was serious about conservation.
Premier Colin Barnett last week said the committee would look at whether Coral Bay - which has never been gazetted as a town and has had no land sales since 1973 - should become a town or "a specialist tourist visitor location, if you like, the Rottnest of the Pilbara".
According to the Gascoyne Development Commission, authorities capped Coral Bay's daily population at 3600 overnight visitors, 400 residents and 500 day trippers because of the "fragile ecology of the landscape and the potential for human activity to negatively impact upon (Ningaloo) Reef".
Shire president Karl Brandenburg said the State Government had recently helped it fund a Coral Bay settlement structure plan, with input from CSIRO, that contemplated those numbers swelling by just 20 per cent during the next 25 years.
"If they allow it to be unfettered and open it up to all and sundry, that's what we are trying to avoid," he said.
"The corals and fish stocks would be at great risk. They are at risk now with what we've done already, let alone increasing it."
Opposition Leader Mark McGowan said the population cap made sense and was based upon scientific analysis.
Mr Barnett said he wanted a small subcommittee to get the investigation underway and the Environment Minister, Albert Jacob, would be involved at different times.