Residents living near the bus depot on Ettalong Road claim their investigations have revealed the company has been operating on the site without approvals from Lake Macquarie City Council.

The council has issued the company with a notice of intention (NOI) to serve an order regarding the use of the site.

A council spokesperson said the proposed order requests that the owners cease using the property as a transport depot.

"[However] council is obliged to consider any representations made by the business operator before considering further action," they said.

Hunter Valley Buses has requested a time extension for responding to the NOI.

The company is expected to challenge any order to cease operations.

The Lakes Mail invited the bus company to comment, and to answer questions.

The company said only that it was "liaising with council in relation to the Morisset bus depot".

The council would neither confirm nor deny claims that the company was operating without consent.

In reply to a direct question about consent, a council statement said "this matter is subject to an ongoing investigation".

Morisset couple Alan and Christine Smith live next door to the bus depot.

They said the depot was a concern because of noise, water runoff and flood lighting.

"You try 30 buses starting up at 6am of a morning outside of your bedroom window," Mr Smith said.

"We might as well be living on a train track.

"And we don't have to turn any lights on at night to get up and go to the bathroom - the place is lit up like a Christmas tree at night."

Mr Smith said the impact of the depot on property values was also a concern.

The Smiths aren't alone - the owners of other properties immediately surrounding the bus depot have signed a petition urging the council to have the business relocated.

"When we first bought here in 2002 there was only about eight buses," Ms Smith said.

"We checked it out thoroughly to see how big a concern it would be to live next to it."

At that stage, the depot housed only school buses.

In 2007, the bus company was bought by multi-million dollar organisation ComfortDelGro Cabcharge.

Then the number of buses at the depot grew rapidly to about 30, he said.

When the Smiths start making inquiries about Hunter Valley Buses' operations, they assumed the company had been operating with council approval.

But when the couple obtained records on the depot, they were surprised.

"When we sat and went through every piece of paper, that's when the penny dropped - they've never had a development application," Ms Smith said.

The council and the Environmental Protection Agency have since launched a joint investigation of the company.

The Smiths say they aren't looking for compensation. They just want the situation resolved.

"There is no way [the depot] should be there," Ms Smith said. "We just want it gone and want to go back to living peaceful lives."