The 416.9 hectares of land surrounding Butterwick Road, High Street and Clarence Town Road at Wallalong has been nominated by the developer, the McCloy Group, for a state government review.

The review will look at ways to increase housing production across NSW in the short term and will recommend areas where there is a "likelihood houses will be built within three years".

Based on a pattern of 10 dwellings per hectare and including infrastructure, a layout Port Stephens Council and the developer have drafted, a potential 3167 dwellings could be built in the proposed area.

As part of the process Port Stephens Council will be asked to make a submission and the council's group manager of sustainable planning David Broyd told the Examiner the council was 100 per cent behind the project.

"Port Stephens is fully supportive, both politically and professionally, of the rezoning and development of Wallalong as a housing growth area," he said.

The council started pushing the previous state government for Wallalong to be approved as a development option and recently it was adopted in the Port Stephens Planning Strategy.

The council is now seeking endorsement of the strategy from the current state government with Wallalong's inclusion and a favourable recommendation could fast track the development.

"This is a very strong case for development of the site, recognising that there are some significant infrastructure constraints and cost implications to resolve to enable any future development," he said.

While infrastructure concerns have been raised the review's guidelines state that any development should come at no additional cost to the government, instead infrastructure costs would need to be covered by the landowner. It is anticipated the review will be completed in the first quarter of 2012.