Completing one of the largest unfinished infrastructure projects in New South Wales could turn Wollongong and south-west Sydney into one mega-region, according to a new report.

A rail link connecting Wollongong to Western Sydney was first proposed in the 1970s and work started on the Maldon–Dombarton freight line in the early 1980s.

However, the project was abandoned in 1988 with the line half built, and since then there have been several false dawns that the line might be completed.

A new report from lobby group the Western Sydney Leadership Dialogue has called for the project to be revived as the rapid population growth in Wollongong and south-west Sydney brings the two regions closer together.

"The two areas could be seen as a mega-region of national significance," the report stated.

The centrepiece of the report is the Macarthur-Kembla line, a dual-track freight and passenger rail line linking Port Kembla to the South Sydney Freight line and ultimately the Western Sydney "Aerotropolis".

Chief executive of the Western Sydney Leadership Dialogue Adam Leto admitted there have been several iterations of the rail line in the past, but he believes now is the right time for the project.

Western Sydney airport 'huge opportunity'

The route was first conceived as a freight line, but adding a passenger line would allow people to travel from Wollongong to south-west Sydney in just 20 minutes.

NSW Planning Minister Paul Scully has been a staunch advocate for the project since his time in opposition.

The Member for Wollongong said the project was immensely important due to the opportunities presented by Sydney's second airport at Badgerys Creek.

"There is going to be a need for us to have a good connection for passengers and workers to the new Western Sydney airport," Mr Scully said.

"Making sure Wollongong is connected to the Aerotropolis and making sure we're connected to the newest city to be built in Australia in a hundred years in Bradfield; if we don't, we're missing out on huge opportunity."

Mr Scully said the Illawarra Rail Resilience Plan, which was funded in the latest state budget, will examine the rail connection, but he does not know what the project would cost.

"It has been a while since any serious costings were done but it was in the multiple billions at that stage," he said.

"If you are expanding the capacity of it that adds to it; if you're having to get new or different rolling stock from other parts of the network, that would add to it."

Mr Leto said the line will also provide much needed public transport for the tens of thousands of residents moving into new suburbs in the growth area.

“Electrification of the line between Picton and Macarthur, a dual passenger line to allow residents in those new areas that are coming online in the next 10 to 15 years in places like Wilton and Appin, to have that connection into the Sydney rail network so they can have more access to jobs and services."