Eighteen hectares of land at Lee Point, north of Darwin, has already been cleared by Defence Housing Australia to make way for an 800-home development.
The area - known as Binybara to its traditional owners - is home to endangered birds, including the Gouldian finch and has heritage significance for the Larrakia people.
Advocacy group Environmental Justice Australia said the Northern Territory Civil and Administrative Tribunal had ruled site work cannot continue until a legal challenge from Larrakia Elder Tibby Quall was heard.
"This significant decision provides vital interim protection for a place of great cultural and ecological importance to the Larrakia people," the legal centre said in a statement on Tuesday.
Mr Quall alleges the necessary plans and approvals had not been produced for the project under the NT Heritage Act.
Defence Housing voluntarily stopped work at Lee Point in August 2023 to allow a cultural heritage application to be assessed, after members of the Larrakia nation described the area as culturally significant and asked that it be preserved.
The application was rejected in March 2024, despite pleas to then-federal environment minister Tanya Plibersek to act to protect threatened species in the area.
But the EJA said the tribunal had found the NT Heritage Council's process of consultation was flawed because it failed to consult Mr Quall.
It also found the council failed to consider its heritage significance.
"An acknowledgement like this from the tribunal is really strong. Our culture and this case will remain, for our children in the future, their children, they will have something," Mr Quall said in a statement.
EJA lawyer Kip Frawley said Mr Quall had been clear since he first objected to the development in 2017 that "this is Larrakia Country and the sacred sites and cultural objects on Larrakia Country belong to them, and to the land".
The tribunal ruled that Defence Housing must stop work at Lee Point until the tribunal's proceedings are determined.
In May, Defence Housing was fined $18,780 for illegally clearing land at the site.
The EJA said a community blockade of the site in 2023 drew national attention to the issue but risks to the land remained.
"The injunction marks a critical moment, ensuring no further damage can occur while the tribunal matter proceeds."
Defence Housing said in a statement to AAP it was considering the tribunal's decision.
"The Lee Point development is a significant project not just for Defence families but for its contribution to the NT economy and its assistance in addressing Darwin's critical housing shortage."
Defence Housing said out of the site's 132 hectares more than 33 hectares would be set aside for conservation purposes, while more than 22 hectares would transfer to the Department of Environment, Parks and Water Security to expand the Casuarina Coastal Reserve.
It said that following an archaeological survey, artefacts from the site were relocated with the participation of traditional owners and were now securely held by the Larrakia Development Corporation.
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