The asbestos was found by the Environment Protection Authority, after a tip off to its pollution hotline.

The waste was found at 93 Furlong Road, Cairnlea, a statement from the authority said.

That property is owned by Stefce Kutlesovski and Raman Shaqiri's Cairnlea Pty Ltd. The pair also owned the 159-year-old Corkman Irish Pub, which they demolished on October 15. The Cairnlea property is earmarked for a luxury development called Havenlea and is in the middle of a busy housing and retail area.

The Environment Protection Authority intends to issue a notice to the developers to cover the material to prevent any dust leaving the premises. But on Wednesday, the material remained exposed inside the site, which included several pipes, a truck and a crane. The land is surrounded by new houses, many overlooking the land and the dump.

Residents on Bill Carn Avenue, a part of which runs parallel to Furlong Road, remained unaware of the toxic material next door. The only sign on the red fence surrounding the land warned trespassers to stay away, yet there was nothing to caution nearby residents of the dangerous material on-site.

They only found out after media presence on their otherwise quiet street.

Jamal Elhussein, who lives just a couple of doors down from the site, said her children, all under six-and-a-half years of age, had been playing in the backyard which could have contaminated dust.

She said it was horrifying to think her family could be exposed to the deadly waste.

"My kids play here every day," she said. "It's upsetting. All my neighbours have little children as well."

Ms Elhussein said she had heard trucks working late into the night two weeks ago, but didn't know what they were doing.

"We heard the trucks and diggers and I told my husband they shouldn't be working at 10pm at night. We have to complain to the council," she said.

"Now, I am scared. It is not good for the kids or for ourselves.

"That's just disgusting, I am sure the [developers] have children and they wouldn't like this to happen in the area and next to their house."

Her neighbour across the road, Carmela Frietta, whose house is second from the site, said she was worried about her grandchildren who had been visiting and had been playing in the back garden since the asbestos was dumped.

Ms Frietta said she was going to call Brimbank City Council to demand the waste be removed safely.

Drage Avtarovski's house is third from the vacant site which backs onto the avenue. Mr Avtarovski said he could see trucks working on the field from his balcony.

The Havenlea development fronts on to Furlong Road, with a busy shopping centre and a child care centre. The Cairnlea Park Primary School is less than 300 metres away.

There is also Cairnlea Commercial precinct with a fitness centre, hair stylist, and an MP's office.

At lunch, the Cairnlea Town Centre was bustling with people sitting in the outdoor cafes.

Ulfeta Bajric, who works in the shopping centre and lives adjacent to the site, said she had no idea about the asbestos being dumped across from her work and home.

"It is unbelievable," Ms Bajric said.

"We sit out here everyday, people have a coffee, live around here. It makes me scared, especially as it has been so windy."

Ms Bajric said the toxic waste should be cleared up immediately and those responsible penalised.

Cameron Vurovecz's Harcourts Real Estate office is directly opposite the Havenlea site on Furlong Road.

Mr Vurovecz said he heard about it on the Cairnlea neighbourhood watch page.

"It puts a fright to people's mind," Mr Vurovecz said.

"It's a bit of a jab to the community and the residents that [the developers] have decided to pollute the area."

Brimbank City Council director city development Stuart Menzies said council was "disgusted" by the actions of the "rogue operator".

Mr Menzies said the  council was assisting the EPA, and its own compliance and environmental officers had inspected the site.

"Council will also be exploring its own legal options to seek penalties and prosecution for this deplorable behaviour," he said.