Wollongong could receive millions of dollars in funding after it was found to be significantly "indirectly affected" by mining.
The Resources for Regions program aims to relieve infrastructure constraints and support communities affected by mining activity by providing up to $160 million worth of funding over four years.
Wollongong was originally left off the list of seven local government areas eligible of funding, angering the local community.
Lord Mayor Gordon Bradbery described the exclusion as "outrageous", Illawarra Mercury reported.
However a reassessment by Infrastructure NSW found Wollongong could apply for funding in 2013-14 as the area was significantly "indirectly affected" by mining.
"Resources for Regions provides grants worth millions of dollars for communities experiencing unique direct and indirect pressures on their infrastructure and services as a result of mining activity," Deputy Premier and Minister for Regions Infrastructure Andrew Stoner said.
"An independently audited assessment was completed earlier this year to identify which communities needed funding most urgently and to determine which LGAs could apply in 2013-14.
"The assessment identified LGAs directly impacted by mining activity based on royalties paid, and those indirectly impacted based on survey responses and mining-related truck movements."
Stoner said potential applicants for funding would include the council, businesses and community groups.
"The NSW government will be looking for innovative approaches to the delivery of community infrastructure and includes business projects which seek to deliver infrastructure with common user benefits," he said.
"In recognition that rapid mining-related growth places pressures on economic as well as social infrastructure in mining-affected communities, the program is open to economic and social infrastructure projects.
"Funding for infrastructure projects will be allocated through a competitive grants process following consultation with stakeholders."
Kiama MP Gareth Ward said Wollongong would greatly benefit from the funding.
"I was determined to fight for every dollar I can get out of Macquarie Street for this region – there was a clear disparity when the Hunter was doing so well out of this program and the Illawarra was not."
The deadline for expressions of interest for projects in the Wollongong is June 11.