The tribunal overseeing council rates in NSW has granted special permission for 17 local governments to exceed previously set caps on price increases.

The highest increases will be in Strathfield Municipal Council, which is approved to nearly double rate income over the next four years, and Lithgow City Council, where rates will spike by 46 per cent in the next financial year alone.

The Independent Pricing and Regulatory Tribunal (IPART) previously capped rate increases at 3.7 per cent, with allowances of up to 6.8 per cent to account for population growth.

Of the 17 councils that applied to exceed limits, 14 had their applications approved, while three others were granted increase above the cap, but below their asking figure.

Four councils, including Lithgow, Tenterfield, Walcha and Strathfield were granted rate increases above 35 per cent for the coming financial year.

Other councils approved for steep rate hikes include Snowy-Monaro, Armidale, Queanbeyan and Bega. 

IPART chair Carmel Donnelly said the tribunal weighed cost-of-living stress against the risk of losing services.

“We've looked very closely at affordability, keeping in mind obviously that there are cost-of-living pressures on rate payers and we've also looked at the impact on ratepayers if services can't continue,” she said.

Ms Donnelly called on the state government to investigate the financial model for local councils, looking at ways for them to be more financially sustainable without relying substantial rate increases.

“It could include looking at what are the funding sources, whether it's grants or fees and charges or rates and the appropriate burden to be placed on ratepayers. It could also be looking at expenditure,” she told the ABC.

Tenterfield council applied for a three-part rate variation representing a cumulative increase of 104.49 per cent, but it was only partially approved by IPART yesterday.

It has been approved for a 43 per cent increase over one year.

Mayor Bronwyn Petrie said the new rate change was "a start", after being forced to make service cuts.

"We have made huge saving cutbacks in the last two years, a very much restricted program," she said.

"We are running so lean, but now that we have this decision, the community will then see what we said through the consultation very, very clearly, that if we do not get a sufficient rate rise there will be more cuts to services.

"It will hurt us all in the community, but we will just have to do the best we can for our community, in the best way we can going forward."