The panel looking at ways to redevelop the aging park, which the government shut down earlier this year, said revenue from residential sales could help pay for reconstructing Ontario Place.
"We didn't get into the form of housing, as in condos, townhouses, rental or whatever, or the build form," said panel chair John Tory, the former Progressive Conservative leader.
"But we tried to make very clear what it is not meant to be in our minds, and we put it in a red box, and we put it in writing: not a wall of condos."
The NDP expressed fears the city of Toronto will allow high-rise development at the park to increase its tax base.
Only the very rich will be able to afford waterfront condos at Ontario Place said New Democrat MPP Rosario Marchese, who complained the public park land would be sold off to the highest bidder.
"Residential is a euphemism for condos, which is what they want in order to make it attractive to developers," said New Democrat MPP Rosario Marchese.
"It'll be for millionaires. It won't be for people like most of us."
The Progressive Conservatives said they liked the idea of having some residences at Ontario Place, but questioned the need to build a hotel and resort complex as the panel recommends.
"That smacks of a casino to me, and I think people will see that," said Conservative critic Ted Chudleigh.
The Liberal government has already rejected the idea of building a casino on the 39-hectare waterfront site, adopting an earlier recommendation from the advisory panel.
There should always be public access to all areas of the waterfront at Ontario Place, even in front of private residences, said Tory.
"We set the maximum of 10-15 per cent for this residential component, and while there will be some shops and restaurants, we think the rest of the site should be very public," he said.
"There should be some kind of promenade or whatever that goes all the way around it, and if the people in the condos don't like that, then I guess they don't have to live there."
Any private development in Ontario Place should be very tightly restricted and Toronto city council must resist developers' efforts to secure higher-density projects at the site, added Tory.
"We do think people should live there as part of bringing the site to life 12 months of the year, but we say it should be done subject to very strict rules and a great deal of discipline," he said.
The panel also recommended the return of the Forum concert venue as part of a revitalized Ontario Place, and wants the government to drop previously announced plans to tear down the iconic, giant white Cinesphere and instead have it restored.
"It’ll never become part of our heritage if you tear it down after 40 years," said Tory.
"We were unanimously of the view that it would be best if the Cinesphere and these pods were retained."
The advisory panel drew up its plans based on private investment and donations from very wealthy people who may want to have their name put on a new attraction or building at Ontario Place, without counting on any money from taxpayers.
There's no estimated cost for the revitalization because there are still no firm plans as to what will be built and what the new park will look like, said Tory.
"Suffice it to say there are tens and maybe close to $100 million in things that need to be done just to sort of bring the existing site up to snuff in terms all of the things that have been there for 40 years now and need work, so it’s quite a lot of money," he said.
"Look at some of the numbers of donations, for example, that were made by philanthropists in Chicago, hundreds of millions of dollars."
The cash-strapped Liberal government closed most of Ontario Place earlier this year to help trim a $15-billion deficit, saying it couldn't afford to keep the park open.
The government said Ontario Place will be closed until 2017 and the water park and amusement rides would be torn down.
Tourism Minister Michael Chan was not available Thursday to comment on the report, but issued a release saying he would review the recommendations and will respond "in a timely fashion."
Annual attendance at Ontario Place dropped to about 300,000 from the 2.5 million who visited when the park opened in 1971.