The smart technology will charge visitors to pay for street parking, while ensuring that Port Stephens residents, ratepayers and town centre workers would be offered free parking.

The paid parking zone would include Government Road, Church Street, Tomaree Street, Yacaaba Street, Victoria Parade, as well as extensions of Magnus Street and Donald Street.

The council says that the smart parking concept will reduce congestion, improve safety by making it easier to find a park and pay by card, coin or the app, and help pay for CBD infrastructure improvements.

However, some Bay business owners have been critical of the council's rush to approve the system without a business plan, claiming the scheme would drive away visitors to nearby Salamander or Shoal Bay shopping precincts where parking remains free.

As part of the Smart Parking Infrastructure program approved by Port Stephens Council in May, a new state government-funded Park'nPay app, which provides motorists with more choice and convenience when it comes to feeding the meter, went live on Thursday, September 24.

In launching the new app, NSW Minister for Customer Service, Victor Dominello, said it was a "game changer", making life easier for drivers by allowing them to pay for parking and top up online without having to return to their vehicles.

"School holidays start this week and many residents and visitors will be flocking to the Nelson Bay foreshore. The app takes the stress out of parking and means you don't have to search around for coins or rush back to the car to top up," he said.

"Some 24,000 drivers across Sydney and the Central Coast have downloaded the app, with 93 per cent giving it the thumbs up."

Parliamentary Secretary for the Hunter and Cost of Living, Catherine Cusack, said the Park'nPay app helped drivers avoid parking fines by sending a notification to them when their meter is running low or their park was about to turn into a no stopping zone.

"We're putting more parking power in the hands of drivers," Ms Cusack said.

The council is now exploring ways to expand the technology beyond Nelson Bay. Parking inspectors can search for licence plate details using an app on their phone to see if a meter has been paid.

Parking meters in Nelson Bay will continue to accept coins and credit cards.

The app can be found by visiting parknpay.nsw.gov.au. For information on the council's smart parking technology go to portstephens.nsw.gov.au/live/resident-services/roads/parking-in-port-stephens.