Changes to infrastructure funding will force New South Wales councils to increase their rates or defer basic community infrastructure, the Local Government and Shires Associations have warned.

Local Government Association president, Genia McCaffery, said councils were considering refusing new DAs that require development contributions until they work out how to fund shortfalls resulting from changes under the NSW Government's Comprehensive Housing Supply Strategy.

“Liverpool, Camden and The Hills Shire councils have all made this move and I won’t be surprised if other councils will follow suit – especially those in the high growth areas of Sydney and coastal NSW,” Cr McCaffery said.

“Councils are at a point where they’re left with no choice but to do this. It would be irresponsible to go ahead with new developments while the funding is so uncertain.”

Cr McCaffery said the changes were made with minimal consultation with councils, no transitional arrangements and no understanding of the “magnitude of the financial impact” on councils and communities.

“We’re talking billions of dollars that’ll be impossible to make up unless we hit our residents hard with exorbitant rate hikes – and that’s the last thing we want to do,” Cr McCaffery said.

LGSA has called an urgent meeting with mayors and general managers to deal with the issue.