The zoning change, part of a planning proposal lodged by Lake Macquarie council last year, could reap the government a multi-million dollar windfall if it sells some of the 151 homes it owns for redevelopment.

But the Land and Housing Corporation (LHC) says its long-term plan is to provide "more housing" in Windale and a "better social housing experience" for residents.

The proposal's aim is to encourage medium-density housing, like units and townhouses, in the walkable area between the Windale and Mount Hutton shops, and to stimulate more private housing ownership.

The LHC owns 967 homes in the suburb, with 151 dwellings subject to the rezoning. Most are decades-old houses on relatively large blocks, with many adjoining.

Residents of the affected properties say the were not aware of the proposed rezoning until recently. As tenants, they were not directly notified of the planning proposal's exhibition.

Patricia Handy, a Cherry Street resident for the past seven years, said she had no idea of the rezoning and its potential implications.

"I knew nothing about it," she said. "I was in shock. We are the residents and we haven't been informed, that's just not right."

Ms Handy, 51, said she was worried about the prospect of "up-rooting my children, my life and my home" if her property had been earmarked to be sold.

"We love it here," she said. "My seven year old has a really good school at Windale Public, really good friends. This is our community.

"We are a community-based, family orientated suburb. We don't want to be moved."

In its submission responding to the proposal, Mount Hutton-Windale Residents' Action Group expresses concerns about the lack of information about what comes next for residents if the rezoning occurs.

"In its theory, the rezoning of this area seems more idealistic than practical," the group says. "At this stage it is not known what developments will take place.

"However, we question whether residents will be displaced, what advanced warning they would be given and where they would be rehoused ... there is a need for transparency so that existing residents are aware of the changes that will occur."

The group's chair Heather Brezmen says it is often the first point of call for residents with community issues. But she says the lack of government transparency has left them unable to answer residents' questions.

"If people start to get a bit anxious, if there's concerns, we want to be better prepared to answer their questions," she said.

"We want to know what will happen. We understand a part of it may become private ... but housing is a huge issue for people.

"Until we get some answers, or until things become a little more transparent, we don't know what's happening either."

Charlestown MP Jodie Harrison, who said there was "huge issues" with the state of social housing in Windale, wants the government to be up front about its plans.

"If they are sold off and there is no benefit to the people of Windale, that will make me really angry," she said.

"We've seen major sell-offs down in Sydney at the The Rocks ... that's been a huge financial windfall for the government and there hasn't been housing provided in that particular area for the residents, and it's been a long and drawn out process to find places for residents who have to relocate.

"That would be my concern for the people of Windale, if they have to go through that, and I truly hope that's not what this plan is about.

"I hope that it is about providing more housing and a broader range of housing in the area, rather than moving people out."

She said it was a "great idea" to investigate the "best mix" of housing, but was "suspicious" of the government's long-term plans.

"It's probably pretty clear that the houses are reaching the end of their useful life," she said. "My concern is that people who need social housing continue to have it in the areas they want to live.

"Many people have lived in their homes for a long time, and although yep, they are social housing properties owned by the government, they are also people's homes."

While the aim of the changes are to bring more dense housing, how that occurs and what it looks like remains up in the air. The government is refusing to say if it has detailed plans beyond the rezoning.

"As part of the NSW government's Future Directions for Social Housing in NSW strategy, our aim is to provide a better social housing experience for tenants in Windale through providing more housing, as well as opportunities and support for them to leave social housing," An LHC spokesperson said.

"Through the Communities Plus program we are developing new mixed communities, where social housing blends in with private and affordable housing close to transport, employment, community facilities and open spaces."

Lake Macquarie council said various studies had informed the rezoning, which was proposed on the basis that Windale was close to "existing services, facilities and employment areas" and therefore had potential for "infill development growth".

"Council is planning to invest more than $7.5 million to provide services and infrastructure that contribute to an even stronger, more vibrant community," it said.

"A new skate park, community hall and library are among the council projects in the pipeline ... while the recent expansion of Lake Macquarie Square and Spotlight Group's multi-million retail and commercial centre adjoining the suburb demonstrate a growing appreciation of its potential."

Charlestown MP Jodie Harrison said the rezoning could bring positive changes to the suburb, which she believes has suffered from a lack of investment in community facilities and infrastructure.

"Windale was originally called Surprise Town. It was a social housing experiment, in the same way there's some other suburbs in Sydney, particularly south-western Sydney, that were social housing experiments where you built a whole suburb out of social housing," she said.

"The issue is to make sure the infrastructure is there at the same time, and I don't think the infrastructure has developed in the same way as it should have over time.

"Transport is a major issue. Windale's got a great school, Hunter Sports High has just been rebuilt.

"But there's also got to be places where people can have jobs, and for people to be able to get to jobs."

Ms Harrison, along with residents, expressed hope that the Pacific Highway retail development offer jobs for locals.

"When Masters first made approaches about developing that, they made a commitment to local employment," she said.

"That was a really point that was used to be able to get council to release that land. They need to come good on that promise, whoever develops that land.

"It's what the local people need and what they expect."

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