At it's meeting today, it considered an ''expression of interest'' from Universal Developments Limited to build 400 houses on land on the southern outskirts of the township.
Eight councillors voted in favour of the proposal and three councillors - deputy mayor Calum MacLeod, Wanaka Community Board chairman Quentin Smith and Arrowtown ward member Scott Stevens - voted against it.
Before the approval, Lake Hawea residents had made it clear - through feedback to the council, a petition and public statements that a majority did not want the subdivision to go ahead.
Public feedback gathered by the council from across the Lakes district included 114 comments opposed to and 64 in favour of the SHA.