In a move that has outraged neighbours, Tantallon reopened for business last Wednesday, only weeks after an undercover private investigator got enough evidence to shut it down at its former address.

This time Tantallon's owner has rented a house on Cardiff Arms Avenue, right in the heart of a suburban family setting, but he insists it's for "accommodation" only.

"It's somewhere to keep the girls for escorts," he said.

"The girls work the motels, and they don't like sitting around motel rooms all day."

His claims run contrary to classified advertisments in both Dubbo and Orange during the past week that claim: "Tantallon moved to new better premises" and "ladies needed for house in Dubbo".

Paul Blackhall lives next door with his wife and two young daughters under the age of seven, and he said he bought the house two months ago "for the kids".

Now, the street's new business is immediately next door.

"This is an area where you want young families," he said.

"This shouldn't be happening next door to me."

He said there were other parts of Dubbo that were more appropriate, and he wanted council to get rid of Tantallon "flat out".

Mr Blackhall was thinking of putting up a swing set for his daughters, but was worried about what they might see the over the fence.

"What sort of people will there be in that place?" he asked.

Another neighbour, who didn't want to be identified, said she was so shocked by the revelation that she was prepared to move out.

"I wouldn't feel safe," she said.

"Why do we have to have it in Eastridge? I'd end up moving out."

Council's environmental services manager Michael Keys said they had received allegations from the public about the premises, and an investigation was ensuing.

"Then we'll consider our legal options, including serving notice or seeking a court injunction to stop them operating," he said.

But he said the investigation would be far more straightforward than the one needed to shut down Tantallon last month in its former location.

"Because it's in a residential area it's easier to prove a commercial activity. There's a lesser onus of proof."

Council has held discussions with the local police and the letting agent Western Plains Real Estate, and is now "in the midst of trying to establish the facts".

Meanwhile Mayor Allan Smith, who is a well-known Eastridge resident, is angry about the allegations and has issued a firm warning to Tantallon's owner.

"If it is operating illegally, it'll suffer the consequences," he said.

Asked how he felt about the establishment popping up in his own corner of town, he said, "the whole town is my backyard".

"If there is any business activity, even taking calls to perform a business activity, if it's not approved it's illegal."

John Smede is another neighbour who is concerned about the move.

"There's a lot of young children growing up here, it's the wrong place for it," he said.

But according to Tantallon's owner, council's renewed interest in his operations was a conspiracy.

"The police rang up the real estate agent and said they've had complaints coming in from Monday," he said.

"But we didn't move in until Wednesday."