Ku-ring-gai Council, which covers a swathe of suburbs on Sydney's north shore, is one of several local government areas in line for higher-density dwellings within 400 metres of train stations.
That policy was announced with fanfare in December, when the plan to deliver snap rezoning of 31 transport-oriented precincts was identified as having scope to deliver up to 138,000 extra homes.
Another six stations have since been added to the rezoning program.
Ku-ring-gai councillors voted unanimously on Wednesday night to mount a case against rezoning plans around four local train stations in the Land and Environment Court.
"We have not taken this decision lightly, but we owe it to residents to fight for our environment and quality of life," mayor Sam Ngai said.
The council has taken out full-page newspaper ads calling for NSW's residents to "wake up" to the implications of the housing plans, which cover parts of Sydney, Newcastle, Wollongong and the Central Coast.
Premier Chris Minns said he was not worried about more councils following Ku-ring-gai into court and holding up the policy.
"I just point you to every other council, other than one, that sat down and negotiated with the government and got a good outcome," he told reporters.
"There was one hold-out: Ku-ring-gai."
Other councils negotiated extensions to deliver more housing than the government targets, Mr Minns said.
Ku-ring-gai Council voted unanimously in February to reject the blanket zoning changes over concerns about infrastructure, heritage protections and other issues.
Mr Minns said the council needed to be reasonable in its opposition to the housing plans.
"When you've got existing public transport infrastructure, you can't be in a situation ... where you say, every time there's an election, everybody else can take a share of housing, particularly western Sydney, but we're not going to do anything," he said.
"The days of everybody passing the buck and saying we can't do anything about housing reform or zoning or uplift are over."
Mr Ngai said his council was best-placed to decide where extra housing should go, noting it also voted to identify "a range of housing scenarios" in the areas targeted for increased development.
Ku-ring-gai is the third-most advantaged local government area in the nation, according to the Australian Bureau of Statistics, and the highest ranked of the councils targeted in NSW for increased density.
The state needs to build an annual average of 75,000 homes over the next five years to meet its share of a nationally agreed target, but yearly completions currently sit at about 48,000 homes.
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