Homebuyers are entitled to the state government grant if they move from an urban to a regional area.

Picton Chamber of Commerce began lobbying several months ago for Wollondilly to be reclassified as a regional area.

And now it has the support of the shire's National Party branch.

Both organisations believe that availability of a relocation grant would stimulate population growth and economic prosperity in the shire.

The National Party Wollondilly chairman Alan Hay said if residents backed the reclassification push they could count on support from the state National Party.

"For Wollondilly to be ruled out of the scheme, I believe was an error," he said.

"If residents want to go forward and be classified as rural/regional, the Nationals will support them. It comes down to the wishes of the Wollondilly people."

He said it was important for Wollondilly residents to discuss the move — to ensure resident consensus for the proposed changes.

"What we don't want is a very loud minority controlling such a big issue," he said.

"It's about finding out what Wollondilly people want. There needs to be public debate."

The relocation grant was an initiative of the National Party adopted by the state government last July.

Wollondilly Council planning manager Peter Wright said the council wasn't sure if being reclassified as a rural/regional area would trigger disadvantages when applying for other grants.

"It's a potential double-edged sword," he said about being reclassified as a regional area.

"In isolation, being reclassified to enable the grant to be applied would be a good thing to encourage property growth," he said.

"But if we were re-classified across all (state) portfolios, we're uncertain about the impact it would have."

Mr Wright said during correspondence with the premier's department, the council was advised that an area like Wollondilly would benefit from aligning with western Sydney in order to be eligible for infrastructure grants.

He said the council had not resolved its position on being re-classified because the move would risk a "knock on affect" or being "universally" classified as regional area, which could rule Wollondilly ineligible for metropolitan funding.

"You run the risk of cutting yourself off from funding and grants offered to western Sydney," he said.

For details on the regional relocation grant visit osr.nsw.gov.au/benefits/rrg/.

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