Disgruntled Gerringong residents have disputed claims a popular parcel of land is surplus to needs, saying it is well-utilised and any sale could create traffic issues.

Selected parcels of community land in the Kiama municipality have been identified as surplus to Kiama council and its community's needs.

The council's revenue subcommittee previously determined a parcel of land on the corner of Fern Street and Willawa Avenue, used for overflow parking for the Gerringong Uniting Church, had the potential for three residential lots.

A piece of land adjoining the western end of Michael Cronin Oval at 60 Blackwood Street, Gerringong, earmarked for residential lots, was also among the parcels identified.

Kiama councillors have endorsed staff's recommendation to start the re-classification/re-zoning process, which will enable the council to publicly exhibit the proposals and seek any comments.

In May, the council resolved to move ahead with plans to sell the community land.

Funds generated from the land sales would support capital works and infrastructure.

Mayor Brian Petschler said last year this process would help make the council financially sustainable and preserve its autonomy.

Gerringong residents have disputed suggestions the church land wasn't adequately utilised, saying the land is used by the public and church groups for overflow parking and for children's outdoor activities.

Gerringong residents Neil and Alma Macpherson recently launched a petition objecting to plans to reclassify and sell the two parcels of community land.

Since launching it late last year, they have collected more than 2700 signatures from residents and visitors.

Mrs Macpherson said the effect on the church land would be "so bad... It would just impact so much on the views".

"People are just amazed that they could even think of taking the two areas . . . I'm waiting for it to come up at council (to present the petition), as a lot of other people are, to see what happens," she said.

"We think that it's a short-term gain for something that's going to be lost forever."

Fellow Gerringong resident David Brocherie agreed.

"I would have thought more than 2500 signatures on a petition, in a little town that has 3500 people, to me is an indication that many people don't want this to happen," he said. "Green spaces . . . It's important we keep them, because once they've gone, they are gone forever."

The petition states that "the reserve beside the Uniting Church - any building development would hide and detract from the view of the old historic church built in 1884, the minister's residence and the Sunday School hall".

"It is used by locals, visitors, in the summer months by children for after-school activities, for over-flow parking by large church congregations and for funerals and weddings. If this community land was not available there would be parking problems in nearby residential streets which are very narrow.

"The reserve behind the Gerringong Rural Fire Service building is community land and was designated as such over 30 years ago when the nearby residential subdivision was formed.

"It is one of the few, if not the only reserve in Gerringong where trees are able to mature to full height without encroaching on residential views or damaging houses if they fall."

Council general manager Michael Forsyth said consultants were working on planning proposals, which would be reported to council. He said if the council decides to proceed to the next stage, the matter will be publicly exhibited and a public hearing required to take place. He expected it would return to council within the next few months.