Pomfrett's Cottage, which despite being acknowledged as a significant archaeological site, has been recommended for demolition by Port Stephens Council.

A development application has been lodged with council to tear-down the slab hut and build a private home. But Woodville residents have launched a campaign to preserve the building they say is a drawcard for tourists and an integral part of a landmark precinct.

Pomfrett's Cottage, on Paterson Road, was originally part of Albion Farm. It is listed as a significant heritage item in the Port Stephens Local Environmental Plan.

Albion Farm was a site Governor Macquarie allocated to pre-settlers in 1812 to look at producing more food for the starving colony. It is Australia's oldest continuing rural farming site. The cottage is believed to have been built the 1860s.

"It's probably one of the most painted and photographed cottages in the Hunter Valley, perhaps NSW," said Maitland Heritage Guardians founder Chris Richards.

"There's no need for council to approve the demolition. This has sent an earth tremor through the community. I have assessed the property and vigorously dispute claims it is unrestorable. I've had over 40 years experience restoring properties in far worse condition than this."

Woodville School of Arts Committee member, Lis Smark, said the home was originally owned by a bootmaker and his candlemaker wife. "People came across on the punt to see the bootmaker," Ms Smark said. "That area with the school and the school of arts hall was the only social meeting place in that location," she said.

The school of arts doubles as a function centre, particularly popular with Sydney people for wedding receptions, and a hall for Iona School. "We don't want to lose this cottage. It's extremely important to this precinct - part of a great tourist trail. The original owners are buried in a family crypt on the site and it is believed it is the birth place of Les Darcy," Ms Smark said.