The plans of German discount giant Aldi to increase its operations in Australia organically have become questionable this week, as the chain faced its first opposition to a store in a new area.

Camden Council in western Sydney has said that it will defer the development of an Aldi outlet in Mount Annan despite the fact that the chain had "verbally requested council staff to submit the [development application] to council for determination ... otherwise an appeal would be lodged with the Land and Environment Court."

Sue Morris, head of the Council development and environment section explained yesterday: "The application had been recommended for refusal by council, but was instead deferred. Council officers will try to negotiate a resolution on the urban design and impact of the proposed development."

It is expected that the council opposed the plans because of the design of the building and its impact on local retailers, which industry analysts argue will mean that existing supermarkets see a 15% downturn in trade.

Aldi meanwhile maintain that the potential financial impact of the store has nothing to do with the council: "If there is a concern that the Aldi store may intensify competition in the local food retailing sector, it must be borne in mind that additional competition per se is not a matter which is to be taken into account [for granting development approval]."

The council is due to review the application again during March.