Telstra last week offered to alter its plan for the tower at its current proposed location to minimise electromagnetic radiation it will emit toward the school.
Telstra outlined the changes to its original proposal in a letter to Leichhardt Council's legal representative, Margaret Lyons, last week. It offered to reduce the tower's power output and tilt its antennas away from the school.
However, a spokesperson for Leichhardt Council today told ZDNet Australia that the proposal failed to address the community's concerns and would be rejected.
Telstra today said it understood the council's responsibility to protect its residents but indicated the quality of communications services available to residents would suffer if they plan didn't go ahead.
"They're not interested in Telstra pursuing improved telecommunications in that area," said the spokesperson.
However, the council today said it is simply a go-between expressing the will of the community.
"The community aren't happy with [Telstra's] proposal so, as representatives of that community, we're going back to Telstra and saying 'this isn't enough'," said the spokeswoman.
So far all attempts to resolve the dispute have failed, including finding an alternative site for the tower. Telstra said the council had suggested three alternative sites however, it claimed that none of them were feasible.
Telstra was due to begin constructing the towers on Norton Plaza, Norton Street at the beginning of the month. However, it put the construction on hold after residents and parents of pupils at the school staged a series of emotionally charged public demonstrations throughout May.
The council's spokesperson said Leichhardt residents joined forces with the council to oppose the towers after the carrier sent a "factually incorrect" letter to the community in which it claimed to have council consent to build the tower.
"That's when the community came to us saying 'hang on a minute what's going?' and that's when joined forces; when we realised the level of opposition to the [tower] out in the community," she said.
While Telstra has repeatedly claimed that the towers are safe it today said it would be "irresponsible" to locate the tower at one of the alternative sites the council suggested as "the antennas would face directly into the school and be closer".
Ian Barry, a local resident and co-leader of the resident campaign against the towers, said that some parents threatened to pull their children out of the school if the development wasn't stopped.
The council today said it would still like to see the dispute settled amicably, but revealed that it was awaiting legal advice on the matter.
Telstra today said that it would now have to consider its options.
If the dispute does end up in court, the council position could be weakened by a Victoria Supreme court decision last week in favour of Hutchison over similar equipment built on public housing in St.Kilda.