More than 18,000 new homes across Macarthur have been earmarked for immediate rezoning to boost the region's housing supply.
The state government is expected to fast-track the rezoning process for the Wilton town centre development in Wollondilly.
A regional housing taskforce will also be set up to combat the housing supply shortage across NSW.
Planning and Public Spaces Minister Rob Stokes made the announcement at a recent Urban Development Industry Association (UDIA) luncheon and said the government's focus was now on creating new 'greenfield' housing supply.
"It's clear that as a result of the pandemic, demand for greenfield housing has increased even more than anticipated so we are responding with new housing in some of Sydney's best growth areas, the south-west and the Macarthur," Mr Stokes said.
"Housing supply is not just important in Sydney but across our regions, which are experiencing strong growth as we bounce back from drought and as more people are working flexibly and remotely.
"This is why I am setting up a regional housing taskforce to report back by September on how we can better use the planning system and other levers to boost supply."
The Wilton Town Centre precinct is also expected to rezoned as a matter of priority.
This development will include 1600 dwellings, 17 hectares of employment land that could support approximately 4700 jobs and 39 hectares of environmental conservation land.
Wilton New Town is a 20 to 30 year development project and is expected to be the size of Port Macquarie once complete.
The plans for the town centre precinct were released in November last year.
Wollondilly mayor Robert Khan said welcomed the plan at the time.
"It's fantastic to see the proposal for the new town centre, with land set aside for a shopping centre, a new K-12 school, playing fields and a public transport interchange," he said.
"It also includes an aquatic centre, library and community health centre.
"Our vision is to create a vibrant, healthy and sustainable communities in our new town in Wilton and it is critical we get the planning for the new town centre right."
In 2017 the Department of Planning revealed that a police station, a fire station, a bus service, a public high school, three primary schools, a health precinct, a mutli-purpose community centre, a library, a childcare centre, indoor sports facility and an aquatic centre were earmarked for the Wilton New Town development.
Cr Khan said infrastructure and jobs for Wilton were the priority.
"We welcome the Minister's announcement, as fast-tracking the town centre will mean significant infrastructure investment and job creation for Wollondilly," he said.
"This includes a new retail and commercial centre to provide jobs and services, a new K-12 public school, more parks, sporting fields, health and community facilities, improved roads and public transport infrastructure, as well as protection for the environment to ensure sustainable, healthy lifestyles for the future community."
Deputy Premier John Barilaro said a new approach was needed to help support those in the regions with new housing and make regional towns a magnet for people coming from the city centres.
"From Byron to Bega and Coffs Harbour to Dubbo, regional towns are booming, but in many parts of the state, planning has not kept pace with growing demand," Mr Barilaro said.
"Regional housing markets are complex and unique, and there could be a whole range of factors driving housing constraints and we need to unpack those so we can deliver new housing opportunities for our regional communities."
Other projects earmarked for immediate fast-tracking in Macarthur include the Glenfield precinct which is expected to be made up of 7000 dwellings, six new playing fields, 30 hectares of additional accessible open space and 50 hectares of land retained for Hurlstone Agricultural High School's agricultural needs.
One of the future developments that is expected to undergo fast-tracked rezoning is Lowes Creek Maryland. The proposal encompasses 7000-homes in Bringelly on the site of the historic Maryland and Birling Homesteads.
It includes plans for a shopping centre, 60 hectares of green space including 21 parks and public open spaces and six new playing fields, and a combined primary and high school.
Two sections of planned developments at Leppington, known as Leppington 2 and 5 are also expected to be rezoned immediately.
The housing development will have up to 2400 new dwellings will be built including 1900 dwellings in stage two and 500 dwellings in stage five.
The proposal also includes 8.32 hectares of open space, 2.96 hectares identified for a school site, 23.18 hectares of land zoned for other infrastructure purposes and a 7.6 hectare park valued at $4 million.