Redfern's The Block: protesters fear Indigenous residents will never again live on the historic site

Four decades after 'The Block' was set aside for Aboriginal housing, protesters fear Indigenous residents will never return to live on the historic inner Sydney site.

The Aboriginal Housing Company was handed control of the Redfern site in 1973 and is currently embarking on a two-stage redevelopment.

The first stage includes a $70 million office and retail development as well as student accomodation, while the second stage is planned to include affordable housing for Indigenous tenants.

However, the New South Wales and Federal Governments have no current plans to fund the housing and Aboriginal Housing Company chief executive Mick Mundine says he is still trying to secure cash to allow it to go ahead.

Protesters fear the affordable housing will never be built, and have set up a tent embassy to block the whole development until they get reassurances their demands will be met.

"The DA [development application] has been approved and now we are just looking for the money," Mr Mundine told Lateline.

"We are going to start on the commercial [development] but the affordable housing is still there and it's still going to happen.

"We hope and pray that the Government does give us money toward affordable housing."

The affordable housing plan includes 36 townhouses and 26 apartments, but protesters do not believe the Aboriginal Housing Company will find the money to build the homes.

Protesters say Aboriginal homes should come first

Protester Jenny Munroe is "worried that all we will end up with here is the commercial development and student accommodation and no housing for our people".Â

She is calling for housing to be made available for Indigenous residents as a matter of priority.

"The Aboriginal Housing Company was set up with the mandate to provide low income housing for our community," she said.

"Whatever development goes on here, it should be housing for our people first, not last on the list. Micky [Mr Mundine] is actually dispossessing us again.

"If there is no black housing developed first, there will be no development here, no commercial or student enclave."

Mr Mundine told Lateline the rebuilding of The Block had to start with a commercial development because the private sector will not invest in affordable housing for Aboriginal tenants.

He said the Aboriginal Housing Company hoped to generate income from the retail and office space and then use that money to invest in the second phase of the development.

Protester Joan Bell helped set up the Aboriginal Housing Company 40 years ago.

"This is our land, we fought hard for this," she said.

"Myself, my mum and dad and a few others were handpicked members, founding members to get this housing company going. I want to know, where do we go from here?"

Claims money being withheld amid new slum fears

In 1973 the Whitlam government provided money for the Aboriginal Housing Company to buy homes in The Block.

By 1990, up to 300 Aboriginal tenants lived in the area but the local community became overwhelmed by drugs and crime and many houses fell into disrepair.

As the old houses were knocked down, local property prices soared. Today The Block is regarded as prime real estate.

A source from the former NSW Labor government told Lateline that money had been withheld from the Aboriginal Housing Company because of concerns that re-building affordable homes in The Block would create a new urban slum with major crime and drug problems.