The City of Moreton Bay council has been threatened with legal action by the state government, which claims allowing homeless people to set up camp in Wyllie Park is illegal.

The council, in August, voted to take the extraordinary step of creating an official free campsite at the public park in Petrie after facing increased pressure from people experiencing homelessness.

The park is opposite the Mill in a significant Priority Development Area near the Petrie train station, the UniSC Moreton Bay campus and soon be home of new $205m indoor sports centre for Brisbane 2032.

The camp ground was to be trialled for 12 months but council has been slapped with a show cause notice by Economic Development Queensland, which could take enforcement action to shut it down.

Under the PDA, the site is approved as a green space with play equipment, seating, toilets and BBQs.

“EDQ has issued a Show Cause Notice to Council regarding the illegal use of the park as a homeless camping ground,” an EDQ spokesperson said.

“EDQ has responsibilities under the Act to regulate and ensure land is used lawfully within the Moreton Bay Central PDA.”

Sports Minister Tim Mander on Saturday supported the move by EDQ, claiming the council needed to justify their decision to allow homeless people in the park.

“The Moreton Bay City Council never came to the state government, and EDQ about their plans,” he said.

“I think there are genuine questions that need to be asked about whether it’s appropriate to have a homeless park in that location.

“EDQ obviously thinks the same thing, so they’re now giving the council an opportunity to state their case, and let’s see what the outcome of that is.”

Mr Mander said there was no link between the show cause notice being issued and the fact the indoor sports centre for Brisbane 2032 would be built within the same PDA.

“They’re two separate issues,” he said.

A City of Moreton Bay spokeswoman confirmed correspondence from EDQ had been received but that council was unable to comment further.

Mr Mander said the state government was spending more than $1bn over four years on homelessness and support services.