While local authorities want to construct a children's playground there, the military wish to build a graveyard, the BBC reported today.
The two sides have tussled over control of the land - and on Wednesday the military erected a wall around the site, surprising local authorities, the report said.
Bin Laden, 54, was killed in a US raid on his hideout on May 2, 2011. He had been living there in secret, in a three- storey building behind high walls, for several years before his death.
Since then the land has been lying unutilised amid a growing neighbourhood.
More From This Section
Now, the local government and military authorities are in a dispute over how to use the land - and who should control its future, the report said.
The military-run Cantonment Board of Abbottabad (CBA) moved to occupy the area in May, erecting a rope-fence around it. But they removed it after the provincial authorities intervened.
A member of the CBA council, Bashir Khan, said the military had decided to convert the land into a cemetery.
"It is needed because there is no graveyard nearby for the local population," he told the BBC.
But KP Information Minister Mushtaq Ghani dismissed the plan, saying the grounds were in the middle of a populated area and "not fit for a graveyard".
"Besides, the cantonment authorities have built the wall on land that belongs to the provincial government," Ghani said, adding that the CBA had said they build the wall "to prevent encroachments".
The dispute looks set to continue - and local residents have their own ideas too, with some demanding that the land should be used to build a girls' school.
Some other military officials have mooted plans to build a revenue-generating amusement park on the land.
What everyone seems to agree on is that any project should be chosen with care so it could not be easily associated with the name of Bin Laden - something which could become a source of continuing embarrassment for the military, the report said.