Lake Macquarie council is "interested" in reviewing the name of Coon Island ahead of upcoming infrastructure works, which include updating signage, in the area.
The council denied on Thursday that it was considering changing the island's name on the back of Coon Cheese being renamed, but confirmed it would soon consult stakeholders about it.
Coon Island is named after Herbert Greta Heaney, who lived on the island for many years and was nicknamed "Coon" because his face was often covered in coal dust.
Residents lived on the island in about 50 houses from 1915 until the early 1990s.
The Daily Telegraph reported on Thursday that the council was launching a review of the island's name "amid heightened awareness with the Black Lives Matter protests".
Those comments were not included in a statement provided to the Newcastle Herald, with a spokesman saying "council is interested in working with relevant stakeholders further to explore the naming of the island, as part of works being proposed for the site in 2021/2022".
There have been various reports over the years about the racist nature of the island's name, and the Sydney Morning Herald reported in 2013 that the council was "looking into it" with the Bahtabah Local Aboriginal Land Council.
The land council's CEO, Carol Proctor, was hesitant to comment without consulting Bahtabah elders, who will next meet in early February.
She said there had been "conversations" about the island's name before, but the land council had never been formally approached by the council about reviewing it.
She said the land council would welcome a review.
"In these times it's not really appropriate, that is my personal opinion," she said.
Lake Macquarie councillors offered mixed views when contacted on Thursday.
"These are sensitive issues so it's important and appropriate that we engage with all stakeholders in the community," east ward Cr Adam Shultz (ALP) said.
Liberal councillors Kevin Baker and Jason Pauling were poles apart with Baker insisting the name must be changed, along with Black Ned's Bay and Black Jack's Point. He will move a motion to do so at the next council meeting.
"The naming of Coon Island, Black Ned's Bay, Black Ned's Point, and Black Jack's Point are a hangover from the past," he said.
"This has dragged on for too long, and the time for change has come.
"There is no reason our modern history cannot be recognised - perhaps by simply renaming Coon Island to Heaney Island; Black Ned's Bay and Point to Old Ned's Bay and Point; and Black Jack's Point to Old Jack's Point.
"However, I would suggest that we would be better served by investigating dual naming of these places in consultation with our Aboriginal community."
Cr Pauling said the island's name had been "discussed previously and no issues were raised".
"I oppose any proposed changes to the re(naming) of Coon Island/Coon Island Point," he said.
One Nation MLC Mark Latham, who announced he was moving to Lake Macquarie last year, took to Twitter on Thursday and accused the council of being "out of touch".
"How out-of-touch is Labor's Lake Macquarie Council? There's a small island near Swansea called Coon Island and the Council is looking to change its name," Mr Latham said.
"Why? Because a block of cheese changed its name.
"In an area with high unemployment, the Council should have other priorities."