Conservation of biodiversity in urban environments depends on species’ responses to the intensity of urban development. “Land sharing” and “land sparing” represent alternate ends of a gradient that conceptualises a trade-off between the human population and biodiversity. We used a linear optimisation procedure to (a) identify the optimal allocation of land for people and nature, (b) assess whether the optimal allocation is closer to land sparing or land sharing and (c) examine how this might change under scenarios of human population growth. We surveyed birds in 28 landscapes, each 25 ha in size, along a gradient of human population density (zero to c. 1,600 persons/25 ha) in the Greater Melbourne region, Australia. Species’ responses to population density were estimated using generalised additive models (GAMs). These relationships were then used to determine the optimal allocation of land among different categories of population density based on maximising a community index, the geometric mean of relative abundance (G) of bird species. Human population density was an important driver of the reporting rate for 28 species. Response curves differed among “urban avoider,” “urban adapter” and “urban exploiter” species. For the current human population in the study area, the optimal allocation of land included elements of both land sharing and land sparing. However, for scenarios of increased population size, optimal allocation converged upon a land sparing design. Synthesis and applications. Urban areas represent a mosaic of land uses that offer habitats of differing quality. Land sharing, based on sustaining biota among residential areas, performed poorly under all scenarios due to its inability to support species that depend on natural or seminatural habitat. To sustain more than a homogenised avifauna in urban regions, large tracts of natural vegetation are needed within, or adjacent to, the urban environment. Protecting natural areas on urban fringes will be critical to the safeguarding of nature in the future as urban populations and land-use inevitably expand.