In the light of the scandal, the authorities were looking into reviewing the rules and penalties governing land permits, the lawmakers were told.

The claim of illegal land use was denied by Leung Fuk-yuen, one of two directors of the recreational park.

Leung, chairman of the Shap Pat Heung Rural Committee and a Yuen Long district councillor, said the land had belonged to his ancestors.

'This used to be their land, if you really want to define its ownership,' he said.

'My ancestors began living here at least 300 years ago, and only in the 1970s did the government forcefully take it as country park land.'

Legco's public accounts committee held a public hearing yesterday to discuss an Audit Commission report last month that slammed the Lands Department for years of inaction over alleged illegal occupation of government land, including Leung's Tai Tong Lychee Valley, which is in Tai Lam Country Park.

Tam told the lawmakers that one of her colleagues had failed to follow guidelines in 2006 by not passing the case to a task force after rejecting Leung's application for a short-term tenancy, she said.

As a result, the case received no attention until last year, when Leung tried to apply for a short-term tenancy again and the Lands Department noticed something was wrong.

Tam said: 'The colleague who handled the tenancy thought it was done ... Usually, there isn't any problem with the system. But that time, why didn't my colleague put it back into the system? I'm sorry, I can't tell.'

Leung said: 'How could we have known? They didn't even tell me. Does the government expect farmers to follow the [Government] Gazette frequently?'

He applied for a short-term tenancy eight times, and each time the application was rejected by the Lands Department.

Development Secretary Carrie Lam Cheng Yuet-ngor said land in the New Territories was entrenched in practical and historical issues.

She said the government would come up with revised penalties during the next Legco term.

Heung Yee Kuk chairman Lau Wong-fat has said that some land in country parks used to be private, and that the government was the one grabbing the owners' land.

Lam said government policies would not be affected by what any person said.

The Lands Department knew that the 12,400 square metre park has been using government land for 18 years, but acted only after it came under fire from the commission last month.

The occupation dates back to 1995, when villagers resisted government attempts to remove the lychee garden, which encroached on seven hectares of Tai Lam Country Park.

Leung is a key member of the powerful Heung Yee Kuk and a vocal opponent of the government's crackdown on illegal structures in the New Territories.