Prime Minister Tony Abbott is facing open revolt in Liberal Party branches in his own electorate over his support for a deal that will see a privately owned, for-profit aged care home built on public parklands overlooking Sydney Harbour at Middle Head.

Rank and file members of the Mosman and Balmoral branches will protest at the Liberal state conference on Saturday over what they see as a betrayal of long-term promises by Mr Abbott and other senior federal ministers to protect the heritage of the former Defence-owned site known as 10 Terminal.

The naval heritage buildings of 10 Terminal will be extensively rebuilt to create an 89-bed retirement home known as The Cove.

High-end aged care facilities elsewhere on Sydney's lower north shore are charging upfront bonds of up to $2.6 million per unit to join.

The minutes of the trust's September board meeting reveal it could take a cut of "any premium" generated by the operators of  the Cove transferring the lease to another party.

The decision of the trust to hand publicly owned land to an aged care operator has angered locals, including Mr Abbott's sister, Jane Vincent.

The largest Liberal branch in Mr Abbott's Warringah electorate, Mosman, has passed a motion calling on the government to reject the development and instead  "work with the community towards a truly adaptive use of the present buildings to preserve them and ensure the buildings, site, and harbour foreshores are accessible and available to the public for generations to come".

The motion was supported by 68 of  the 70 attendees.

Branch member and Mosman deputy mayor Roy Bendall said: "Considering that [the development] was being assessed by our own federal colleagues, it was quite a show of strength."

He recalled Mr Abbott's promise in opposition not to let developers take the parklands, and his pledge to stop  the "Keating government's proposed sale of former military land around Sydney Harbour".

In a speech in April 2012, Mr Abbott said: "Largely at my instigation, the Howard government committed more than $115 million to the Sydney Harbour Federation Trust to preserve the natural and built heritage of places like North Head and Middle Head."

Mr Bendall said "something has gone astray" at the trust, which is required by law to protect the heritage of buildings and "maximise public access to Trust Land".

In a letter sent to a Mosman constituent on October 24, Mr Abbott said the trust's plan had undergone "extensive environmental assessments and public consultation" and that he supported the development.