The NSW government hopes to start building a 10-unit social housing development in Waratah West late this year after gathering community feedback on the plan.
Upper House MP Catherine Cusack said on Tuesday that the NSW Land and Housing Corporation was assessing the $3.82 million project in Landa Parade.
More than 3000 households are on the social housing waiting list in the Hunter, and most of the region has social housing waiting times of between five and ten years.
Housing Minister Melinda Pavey said the Waratah West project would help revitalise the surrounding area.
"Communities throughout NSW can expect to see more of these types of developments as the NSW government continues to deliver on its commitment to build more and better public housing," Ms Pavey said.
The Waratah West apartment block includes four one-bedroom units and six two-bedroom units.
Ms Cusack said the government was building "up to" 78 social housing dwellings in the Lower Hunter at Waratah West, Lambton, East Maitland, Adamstown and Shortland.
An Australian Housing and Urban Research Institute report in 2018 found the Hunter needed an extra 15,800 social and affordable housing dwellings by 2036 to head off a homelessness crisis.
At the time, the Hunter had the largest shortfall of social and affordable housing in NSW.
Newcastle-based charity Samaritans warned in its annual Rental Affordability Snapshot last month that homelessness and housing stress would spike when temporary federal government payments to address COVID-19 expired.