The Construction Industry Federation (CIF) has obtained a High Court order preventing Dublin City County from introducing its development levy from January 1st, 2004.
Leave to seek a full judicial review of the Development Contribution Scheme in the council has also been granted to the CIF.
The building levy on new houses in the Dublin City County was to rise from €2,650 to €11,500, a rise of 334 per cent. The federation claims the new development charges - due to come into effect in all council areas - are not legal and are arbitrary.
It claims the proposed levies discriminate against buyers of new properties by obliging them to pay for infrastructure and services for the community.
And the CIF made it clear that the ultimate payer of these new levies would be the house buyers.
The case was taken against Dublin City Council because it is the first council to introduce the new charges. It is seen as a test case which, if successful, will see similar legal challenges to the new levy rates elsewhere in the State.
Fine Gael spokesperson on environment and local government, Mr Bernard Allen said the scheme should now be scrapped nationwide.
"The Development Contribution Scheme is being used as a vehicle to introduce major stealth taxes locally, which will have a serious negative impact on the competitiveness of businesses.
"The Minister must now think again about the introduction of these new stealth taxes and there should be no imposition," Mr Allen said.