This study proposes a novel method for managing surplus soil in urban construction projects by investigating the use of banana leaf powder (BLP) as an eco-friendly and efficient mud-soil stabilizer. This study is pioneering in its focus on the use of an agricultural waste product, BLP, as an alternative to conventional methods that frequently rely on cement or lime, which pose environmental concerns owing to their high alkalinity and carbon emissions. BLP, derived from dried and pulverized banana leaves, traditionally used in various industries, was evaluated for its suitability as a stabilizer against orange peel biopolymer (OBP) and fly ash (FA). The findings of this study are groundbreaking. BLP's water absorption capacity, Wab, although lower than that of OBP, was significantly higher than that of FA, demonstrating its potential as a mud soil stabilizer. BLP increased the compaction and strength of the treated clay, whereas OBP made it more challenging to compact the clay owing to gelatinization. The ease of compaction with BLP is attributed to the absorption of free water into the pores of the particles. These results suggest that differences in the stabilizer's water absorption mechanism affect the effectiveness of the post-treatment compaction process on the treated soil. An analysis of the impact of water absorption capacity on the cone index, qc, revealed a material-independent relationship between the parameter β (=Wab × A, where A denotes stabilizer addition content) and qc for BLP and FA. This is because, in contrast to OBP, BLP and FA did not gelatinize the free water that was not absorbed by the stabilizer and remained in the same form within the treated clay. This indicates that understanding the water absorption capacity and mechanism of organic- or inorganic-based stabilizers is important for predicting the strength of treated soil. The same relationship between β and qc holds true for the hybrid-treated clay using both BLP and FA, with β considered to be the sum of β for both BLP and FA. Furthermore, this study innovatively addresses the concern of BLP decay in treated soil by creating a hybrid stabilizer with FA and conducting experiments to accelerate BLP decay using fungal mycelia. These experiments revealed that the hybrid-treated clay exhibited a more gradual decrease in carbon content and stabilized pH levels, implying that FA could inhibit decay by fungal mycelia, improving the BLP-treated soil's long-term durability. These findings suggest that agricultural wastes with high organic content can be effectively used for soil stabilization and ground improvement in civil engineering construction and maintenance projects by combining inorganic materials and taking advantage of their properties, such as high water absorbency. This can address the issues (such as high alkalinity and high carbon dioxide emissions) associated with cement- and lime-based stabilizers, which were previously widely used.