Parklets convert parking spaces into community areas, providing room for seating, tables, plants and art and can be used for outdoor dining for cafes and restaurants among other things.

Originally earmarked for Nelson Bay's Magnus Street as part of a $700,000 grant from the NSW Government's Streets as Shared Spaces program, the proposal was quashed after some business owners feared the loss of parking spaces would negatively impact on business.

Shoal Bay business owner Helen Love says she hoped that the council would also listen to their concerns.

"I have spoken to other business owners who do not support this proposal at all."

But the parklets did receive the thumbs up from cafe owner Jamie Harding.

"The streetscape hasn't changed in some 25 years. It needs a revamp ... I believe the parklets would generate a fabulous atmosphere along the waterfront and are worth the loss of five or six carparks."

A council spokesperson said that consultation would continue with businesses as the project progresses.

"Mayor Ryan Palmer and council employees walked around Shoal Bay to talk to businesses (12) in December 2020 about the initiative. We also had follow up phone conversations and sent emails to businesses who were not open at the time," the spokesperson said.

"The majority of business owners expressed support for the project, highlighting the need for more activity and vibrancy in Shoal Bay. Businesses were also supportive of prioritising pedestrians, potential improvements to safety, plus having more space for activities like outdoor dining."

Council said that parking concerns were raised during the consultation process.

"This is a trial, which gives us a great opportunity to test the impacts and benefits so that we can create an informed long-term vision for improving traffic and parking in the area."

Ms Love said that the business district could not afford to lose another five car parking spaces, "especially to these eyesores".

"When the upgrades to the bus stop and pedestrian crossing were done a few years back, we lost six car parking spaces from the main street and this had a severe impact on businesses, with the hairdresser in the village at the time closing because of it," she said. "Many of our locals are either elderly or retired and they need easy access to the shops and facilities."

Ms Love said that a petition opposing the proposal had attracted more than 45 signatures in just four days.