A state government-commissioned review will consider this as part of an industry evaluation.

Windang's Peter Mair, a long-time lake activist said its capacity to remain a viable commercial fishing spot was diminishing.

Instead, he proposed transforming it into a recreational facility to boost tourism.

"Good things are happening at the lake, not least a considerable investment in the restoration of infrastructure adjacent to the Windang Bridge," he said.

"It's now past the point when it remains sensible to permit commercial fishing on Lake Illawarra.

"The lake community is ever more concerned that the impact is, on balance, destructive."

Mr Mair also proposed local and state governments co-operating to cover part of the cost of a buy-out of commercial fishing licences via a capital levy on property owners, proportional to the proximity of residential properties to the lake itself.

He argued this would quickly translate to increasing residential property values more than sufficient to cover the accumulating cost of any levy.

Warilla Hotel Fishing Club president Joe Da Silva agreed with many of Mr Mair's suggestions, saying their club and others nearby had halved bag limits during competitions to ease the burden on the lake.

"What they are doing in that lake is not sustainable," he said.

However, he disagreed with the levy proposal.

"We pay enough for our licences and everything we buy is taxed," he said.

Barry Aish, owner of Aish's Seafood at Berkeley has been commercially fishing on Lake Illawarra for more than 50 years.

He said there was no scientific evidence indicating commercial fishermen were harming the lake.

"Where do the public get their fresh fish from?" he said.

"People looking to close places like Lake Illawarra, Shoalhaven River, Tuggerah Lakes... I think there's a big possibility if we don't fight and get public support, we could be gone.

"People who want to close it to commercial fishing are very selfish or ignorant of the facts."

A Department of Primary Industries spokesperson said the government supported sustainable fishing by all sectors, including improving the viability of commercial fishing.

"Overall, the fish stocks in NSW are in good shape, with only a very small proportion of species that are classified as over-fished," the spokesperson said. "However, the state government acknowledges the structure and management of commercial fisheries needs to change and that is why it commissioned an independent review into commercial fisheries policy, which was completed in March.

"Policy commitments have been made on the basis of that review and the government is close to releasing its more detailed response to the 22 key recommendations."