Lake Macquarie councillors on Monday night voted to prepare a planning proposal that would broaden the range of possible legal uses for the site where the German supermarket chain wants to set-up shop.

The NSW government will make a Gateway Determination on the project before a development application can be lodged.

The company plans to open a store on the Bunnings site on the Pacific Highway in late 2021, after the hardware store moves to a new location at Bennetts Green.

Cr Adam Shultz said interest from the company, part of the world's fourth largest grocery conglomerate, was "a real coup for the city".

He said it was good news that Kaufland indicated it wanted to open four to six stores at Lake Macquarie.

A council report tabled on Monday night said the store would directly create 150 full-time equivalent jobs, 49 indirect jobs and stimulate $32.2 million in economic activity each year.

Cr Nick Jones said the economic benefits spoke for themselves.

Cr Kevin Baker told the meeting he believed Kaufland would encourage "destination shopping" and "retail tourism" at Lake Macquarie.

Cr Barney Langford said he supported the plan, but was aware of some concern from the Belmont business community about whether Kaufland would detract from existing economic activity.

He said there would be public consultation periods before decisions on final approvals were made.

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