Goulburn Mulwaree, Wingecaribee Shire and Queanbeyan Palerang Councils are among 23 regional LGAs declared eligible to apply for the state's Accelerated Infrastructure Fund.

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Deputy Premier Paul Toole and NSW Planning and Homes minister, Anthony Roberts, visited Goulburn on Friday to announce that $120 million of the $300m fund would be quarantined for the regions.

Under the fund's round three, councils can apply to fund critical infrastructure for housing subdivisions upfront. This includes roads, sewerage systems, stormwater, drains and parks.

Mr Toole said it would help support councils' delivery of "much-needed new homes" and put downward pressure on prices.

"More and more people are moving to the regions and it is creating growing pains," he said.

"This is about making sure that people have a roof over their heads and have a place to call home."

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He said 26,000 people in NSW had moved from cities to regional areas in the past year, driven by COVID and other factors. This in turn had created housing supply pressures.

The funding could potentially support 150,000 new homes in NSW, the minister said.

A total $180,000 will be allocated for 18 metropolitan councils deemed eligible to apply.

Mr Roberts said eligibility was based on 2022 population projections. Those councils projected to grow by 3000 or more people in the next 10 years could apply for funding. In the southern tablelands, Upper Lachlan and Yass Valley Shires were not eligible.

The minister said councils with shovel ready projects, such as trunk infrastructure to service fully serviced development land, could apply.

They can also nominate development or social infrastructure projects, like open public space and community facilities that "demonstrate the ability to unlock, accelerate or support new housing."

Mr Roberts said it would mean councils could fund infrastructure for subdivisions upfront and recoup it later from developers.

"We see the infrastructure that councils are putting in around hospitals, schools and we have new industry coming in to the regions," he said.

"They are growing and we need to ensure that with all the the jobs coming in to regional NSW that we have houses for them."

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Goulburn MP Wendy Tuckerman said everyone knew the regions were a great place to live and the funding would help ensure a targeted outcome for more housing.

The announcement was made at Marys Mount, a Goulburn suburb projected to accommodate up to 2000 homes. Housing construction is well advanced, with more subdivisions underway.

The council area is projected to grow from 31,808 to 40,204 by 2040, state data shows.

Goulburn Mulwaree mayor Peter Walker said housing supply issues had been raised frequently at Country Mayors and Regional Cities NSW meetings.

"This means we can move forward at a quicker pace," he said.

"When we go to these meetings, we talk about attracting doctors and nurses and getting people to the regions. There are certain councils that are really struggling to come and work in their areas... It's imperative that we fast track infrastructure."

Cr Walker said the council's long-term housing strategy pushed residential development north from Marys Mount.

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The document predicts the need for 2636 more houses in the period 2016 to 2036 for Goulburn and 3359 across Goulburn Mulwaree.

The state forecasts Queanbeyan Palerang will grow from 62,836 people in 2021 to 83,550 by 2040. (1.43pc).

Wingecarribee Shire is projected to grow by 18,649 people to 70,969 over the same period.

A departmental spokeswoman said Yass Valley's population was forecast to rise by 1792 to 2031, and Upper Lachlan's - 794 over the same 10-year period.

Applications for the funding open on August 19 and close on September 30. Following assessment, the minister will approve investments in January, 2023. All projects must begin construction by or before July 1 2025 and be completed by June 30, 2026.

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