The contentious skyscraper, criticised as a "poor urban design outcome" by the City of Melbourne, was labelled the "final flying of the flag of what is now a bygone era" by the Victorian Civil and Administrative Tribunal.

Mr Guy approved more than 70 Melbourne skyscrapers during a laissez-faire, four-year stint as planning minister before being dumped by voters in the 2014 election.

The plans for a skinny 177-apartment high-rise at 141 La Trobe were submitted before current Planning Minister Richard Wynne stunned developers last month by unexpectedly introducing interim rules requiring minimum setbacks and plot ratios, effectively reining in extremely tall and contentious skyscrapers ahead of a year-long central city planning review.

Further west along La Trobe, opposite Melbourne Central, Malaysian development company UEM Sunrise is moving ahead with a $350 million mega-tower, double the size of any other Melbourne apartment building and the third largest in the world by floor area, after it was also approved.

The massive residential skyscraper, the city's largest to date, will house a population equivalent to the small Gippsland town of Foster in its 1343 apartments.

The case for 141 La Trobe went to VCAT on the first working day after the government's surprise decision.

"We must not consider or apply the revised built form controls," members Geoffrey Code and Christopher Harty​ said.

They dismissed the council's concerns the tower will overshadow neighbours and dominate the skyline.

"We are satisfied that while the proposal will be a narrow building and prominent from Lonsdale Street over the Wesleyan Church, it will merge into the broader central city," they said.

The tower may soon be followed by another development next door.

Businessman John Conroy is selling a collection of seven single-storey buildings on one 1543-square-metre development super site that fronts onto Little Lonsdale Street and Bennetts Lane: the alleyway that gave birth to a Melbourne music icon, the Bennetts Lane Jazz Club.

The old, extensively refurbished warehouses, which also front onto Davidson Place, are expected to fetch around $30 million.

Melbourne's central city land prices have soared over the past decade with development sites commonly fetching up to $35,000 per square metre.

Across the road at 42-50 La Trobe Street, a pair of historic buildings recently sold for $22 million to Brisbane private equity group Blue Sky, which has lodged plans to build an $80 million 49-storey student accommodation project with 602 apartments.

The 145-metre tower would have three cafes at ground level and a pedestrian link from La Trobe Street to Bell Place. A bid to get the 19th century buildings – a warehouse and coach-builder – listed in 2012 failed.

And another tower is likely to go up at 54-56 La Trobe Street where negotiations are under way for the sale of a two-storey mid-century office building, currently leased to global education group Kaplan.