Councils across New South Wales are calling on the Labor government to abandon a "secret" planning process that allows developers to propose major housing projects.  

In December the state government opened a pilot "state-assessed planning proposal pathway".

It encouraged developers to apply directly to the Department of Planning and Environment to rezone parcels of land for projects that could provide more than 1,000 homes in metropolitan and 300 in regional areas.

Developers had until January 22 to lodge their applications with the government.

Wollondilly Shire Mayor Matt Gould said he had serious concerns about the new pathway.

"It's an underhanded, secret process where there is absolutely no transparency and we have no certainty of what the outcome is going to be," he said.

Guidelines for the process outlined strict probity measures, stating "experts will need to sign conflict of interest and confidentiality deeds, should they wish to view any project information and provide input".

"We have had some of our staff have to sign non-disclosure agreements to be involved," Cr Gould said.

Wollondilly council believed developers had nominated between four and six sites in the shire.

"It's such a thorough non-disclosure [agreement that the staff] cannot tell us anything  they can't even tell us what villages, how many lots, its impact," Cr Gould said.

"It's incredibly frustrating."

Existing infrastructure deficits

The shire is already preparing for major housing development through the government's Greater Macarthur Plan, with 18,000 homes planned at Wilton and 16,000 for a recently fast-tracked area near Appin.

Cr Gould said Wollondilly was meeting its housing targets and additional developments would only increase the unmet infrastructure burden.

"For Wilton there is a half-a-billion-dollar shortfall in state and regional infrastructure, for Appin we are looking at potentially over a billion dollars in critical infrastructure," he said.

He called on the NSW government to "abandon" the process.

In the neighbouring Wingecarribee Shire, in the Southern Highlands, the council has been made aware of four new land development sites but said it "had not been provided with the detail".

The council is in administration and none of its staff have been asked to sign non-disclosure agreements to provide technical detail.

In February, the council adopted a motion opposing "spot rezoning outside of the local housing strategy".

The new independent Wollondilly MP, Judy Hannan, who remains on Wollondilly Council, also had concerns about the pathway.

"These rezonings are being done without any stakeholder contribution, so people in the area that even live there have no say in them," she said.

She said she wanted to see the rezoning pathway "put on hold" and hoped the state's planning system would soon be "tipped on its head".

Pressure for advice in just '24 hours'

Tweed Shire Mayor Chris Cherry said her council had written to the previous government urging it to rescind the process and already had a similar conversation with the new minister, Paul Scully.

The council believed there were two or three projects targeted in the shire.

Cr Cherry said her staff had also been asked to sign non-disclosure agreements and provide advice in "ridiculous time frames".

"Staff were expected to provide professional advice with regards to these particular locations and given 24 hours to provide that advice," she said.

"That is a lot of things that [they] need to consider, and you are not going to get good quality advice on whether the proposal is likely to go forward."

She said the situation put additional pressure on the shire as it recovered from the devastating Northern Rivers floods, and was out of step with its strategic planning.

A spokesperson for the Department of Planning and Environment said it expected to announce which nominated projects would be eligible to be lodged as planning proposals in the coming weeks.

"Applicants and councils will be notified of the outcome in writing before a public announcement is made," they said.

"When those planning proposals are lodged, they will still face the same strict assessment requirements as usual, including consultation with councils and the community."

In a statement, Minister for Planning and Public Paul Scully said his government planned to review the program.

"We're taking a hard look at the efficiency of the planning system to identify ways to deliver more housing," he said.

"This is a pilot program introduced by the previous government and will be subject to review and evaluation."