Carrathool Shire council is investigating rezoning land in Rankins Springs and Merriwagga to allow for the construction of residential housing.
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The move is dependent on approval by the NSW department of planning and environment, given some vacant land in the respective villages is zoned RU1 for primary production.
Approval from the department would mean council would be able to rezone the land to RU5 village zone.
While changing the zones within the villages would potentially create more lots, Council would also like to enhance that by reduce the minimum lot sizes to 1000 metre square.
Council has noted there are some 30 lots drawn up for residential in Merriwagga alone, but zoned RU1.
Council has noted limitations in the Carrathool Local Environmental Plan is preventing the villages from growing and attracting new residents, with flow on effects ranging from labour shortages to diminishing school populations.
Carrathool Shire mayor Darryl Jardine says he is hopeful rezoning will occur but it could take time.
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"It's a process we started last year and is at the mercy of relevant Government departments," Cr Jardine said.
"It is going to be a long process but I'm confident it will come about.
"No rural community can expand without appropriate land. I know there is definitely demand in Rankins Springs - consultations with the community have highlighted this.
"Basically this will be about changing the zones so we can build houses on smaller parcels of land.
"For the time being, it's a matter of watch this space. We're hopeful of a good outcome down the track."
It's expected there would be associated costs of approximately $30,000 to submit a planning proposal to the NSW Department of Planning and Environment for approval.
Council will prepare a planning proposal for submission for a gateway determination by the NSW Department of Planning and Environment.
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