The closure, announced on Tuesday morning shortly before NSW opposition leader Jodi McKay visited the beach, drew swift criticism from locals and the cafe's owners, who were forced to tell about 25 staff they were immediately out of a job.

City of Newcastle said the decision had been made "following advice from coastal engineers" - in an unreleased independent report - which suggested the building was within "a hazardous zone of wave impact" and "at immediate risk of significant damage or failure in a one-in-two-year storm event".

"According to the coastal engineers' advice, the erosion impact on the building has created an imminent risk to public safety and, as a result, the building cannot be occupied," City of Newcastle infrastructure and property director Ken Liddell said.

"We understand the direct impact this will have for the operators of the café, staff and its patrons as Lexie's is a much-loved and valuable part of the community.

"We will be working closely with the business owner to transition out of the premises to make this difficult process as smooth as possible.

"The erosion of Stockton beach has been recognised as a natural disaster and the city must keep public safety a priority as the ongoing issues are managed and we work with the NSW government on sustainable long-term solutions."

Stockton locals had gathered at the cafe on Tuesday for an update after its owners shared details of what council staff considered a private meeting on social media.

Owner Nick Sovechles said he was informed of the closure over the phone after council staff chose not to attend the scheduled meeting.

Residents were left seething when Mr Sovechles then announced the closure and informed staff their jobs were no more.

Stockton resident Lucas Gresham, who spearheads the Save Stockton Beach advocacy campaign, said the closure would be a "brutal economic hit" to the peninsula's community, which lost jobs last year when the nearby child care centre closed in similar circumstances.

"Twenty-five people that I see on a daily basis, and their families, have just lost their livelihood," he said. "Twenty-five staff and the owners.

"This is an economic problem now. This cafe draws tourism, it draws people from town to come over. This is a big-ticket item. How are we going to draw tourism?"

Mr Gresham said locals were irate with the council, which he accused of dishonesty about the cafe's closure and installation of 16 caravan park cabins on what many considered "public land".

He said the closure "directly shows to us, the community over here, what we matter to Newcastle council".

"The honesty's just not there anymore," he said.

"They've said the land there is not safe, which is just absolute bullshit because a few days earlier everyone has got photos of 90-tonne cranes and trucks fully loaded on the exact location they're saying is not safe."

Council sources say the council has been unfairly targeted and criticised by Stockton residents over the beach issue, when the real responsibility for funding lay with the state government.

But Newcastle Herald files reveal a history of antagonism between the council and Stockton residents over the fates of the surf club, the caravan park and the swimming pool, dating back to a decade ago when the council was planning the overhaul of the caravan park that saw permanent residents forced out and a strategy of higher prices and cabins introduced to stabilise what had been a loss-making operation.

The council released a statement about the closure shortly after Mr Sovechles informed his staff.

In response to questions later in the day, it reiterated the cafe building was at risk in the "event of a one-in-two-year storm", but did not say if the building's structural integrity was compromised.

The council's assets are covered by a blanket insurance policy, but it does not cover erosion events.

The Herald has asked for a copy of the independent coastal engineer's report.

Ms McKay and Newcastle MP Tim Crakanthorp addressed a crowd of about 80 people outside the cafe and pledged Labor's "unconditional support" for the Berejeklian government to approve offshore sand dredging as a "permanent solution" to the area's erosion woes.

Newcastle lord mayor Nuatali Nelmes had been listed on a media notification to attend Ms McKay's press conference on Tuesday, but did not appear.

The Herald asked Ms McKay about the council's role in the closure of Lexie's but she declined to comment on behalf of the lord mayor.

"We lost the child care centre, you've had roads gone,we have the surf club at risk, caravan park cabins moved and now Lexi's closed," Mr Crakanthorp said.

"What more will it take to get this government to sit up and take notice?"

Ms McKay acknowledged that other parts of the coast - notably Collaroy at the southern end of Narrabeen beach in Sydney - were facing similar conditions.

But she said the government was missing in action on Stockton and was refusing to say why it would not support offshore dredging for sand replenishment.

Mr Sovechles and his son Vinny have operated the cafe for the past three years. He said he was shocked to be informed late last week the cafe was closing ahead of a big forecast swell.

Although the council manager who made the decision had visited the site on Friday and Monday, the cafe owner said he had been unable to find out why the council wanted to permanently shut the cafe for a short-term swell that ended up being smaller than predicted.

A council spokesperson told the Herald the building would remain untouched until a long-term solution was found to the ongoing erosion of the beach.

"We have no immediate plans for the building other than cordoning it off and waiting for long-term rectification works to the erosion scarp," the spokesperson said.

"Short of state government intervention, this can not be undertaken until the Coastal Management Program is approved in accordance with the Coastal Management Act."

Many locals were left wondering why the cafe had to be closed but the surf club did not, despite it being closer to the shoreline.

The council spokesperson did not say whether the surf club was at risk of being closed in the near future, only that the "rock-wall infrastructure in front of the surf club is currently protecting it from erosion".

Mr Gresham questioned how the council could "so quickly" move and install 16 caravan park cabins on "public land", which the council manages of behalf of Crown Lands, but could not offer an alternative for the cafe.

"When the caravan park was going in they facilitated, instantly, the removal and relocation of all the cabins," he said.

"And not only have they relocated them, they had a strict plan, obviously, and they've been plumbed in, wired in and all the rest of it.

"If you can act that quickly, why can't we have a relocatable Lexie's?

"There's shipping container cafes and things now, they could have moved it.

"It's a public building that's been leased, you'd think they'd try to accommodate it like the caravan park until further notice."

The council said there was "no suitable nearby premises that could be leased to the café operator".

The installation of the caravan park cabins and associated works on land next to Stockton swimming pool has drawn the ire of some locals, who see it as a "land grab".

A council plan some years ago had mooted the expansion of the park onto land where the cabins are now located.

"For years and years this has been an underlying thing we believe the council has wanted to do, but hasn't really had, I guess, any proper reason," Mr Gresham said.

"But now they've got a reason, obviously the cabins were hanging over, so what they've done is jump on the opportunity to fulfill what they've been wanting to do for ages."

The council moved to quell concerns about the installation of the cabins on Tuesday, describing is as a "temporary measure".

"A development application will be submitted to secure this location in the short to medium term while a long-term solution to the erosion is implemented and the risk to assets mitigated," it said in the press release.

"No available space is available for all the relocated cabins within the existing holiday park as this space is designated for tents and caravans, and the park continues to take bookings.

"While the cabins have been temporarily located, they must be properly secured to safeguard them against high winds, requiring footings and ties to be installed. Underground works to the area east of Stockton Swimming Pool have been undertaken to minimise future costs associated with the security of the cabins, should a development application for the permanent relocation of the cabins in this area be approved."

READ MORE: The Herald's Save our Stockton coverage