Residents and holidaymakers near the remote and unspoiled Cathedral Cove on the Coromandel Peninsula are appalled an icecream stall is operating there under a licence granted by the Department of Conservation.

And they say other hawkers are carrying in chillybins and selling soft drinks there without permission.

The cove has gained international renown after featuring in the 100 per cent Pure New Zealand tourism campaign, and tourists are once again flocking to the site by kayak and on foot.

The cove's crystal waters and famous arch are accessible only by boat or a half-hour trek.

Some residents of Hahei, east of Whitianga, say the icecream business has tainted the untouched paradise and set a precedent for further stalls on Coromandel's coast.

Peter Hawley, who has a 40-year association with Hahei and the cove, says guests of his bed-and-breakfast business have complained about the development.

"Images of Cathedral Cove are splashed all over the world. To travel thousands of kilometres to see it, and then find hawkers on the beach - it's terrible," he said.

"Guests said everything about the place looked as it would a thousand years ago, except someone was selling ice creams."

DoC initially issued the licence for a seven-week trial period, pending approval from the Thames Coromandel District Council.

A public meeting early next year will give people a chance to respond to the developments in and around the cove.

But residents feel the icecream stall should not have been allowed in the first place. They also told the Herald the shop is already operating, without council permission.

"It is astonishing and shocking that DoC would not only grant a licence ... but would do so without any consultation with the community that loves and protects the place," said Mr Hawley.

Holiday homeowner Mary Varnham said approval for the stall had "opened the floodgates", with imitators selling drinks from chillybins they had walked in with.

"This is, quite simply, one of the most beautiful coastal areas and landscapes of New Zealand. In all our years of visiting Cathedral Cove, we have never once heard anyone ruing the fact there are no icecream stalls or snorkel-hire facilities there."

Waikato conservator Greg Martin said DoC was faced with diminishing state funding and had to find ways to fund its work.

Costs at Cathedral Cove included a $500,000 repair of the carpark, ongoing work on the rockfall at the cove's arch, and the stabilising of a rockfall behind the cove to protect houses.

But Mr Hawley said it was not worth ruining the beauty of the site for the 8 per cent of the shop's earnings that went to DoC.