Mr Barilaro released on Wednesday the results of a geological survey which found three offshore sources of sand to replenish the disappearing beach.

He said the "next step" was for City of Newcastle to apply for a mining licence then the government would "pick up a chunk of the tab".

"We'll hold their hand right through. We'll resource it as well. I've got no problem with that," he said.

Asked if this meant the state would fund the application or the dredging, he said: "Do it all. The council's not going to have the ability to do this on their own.

"Of course, they'll have some capacity, but not all of it, and I'll be more than likely and more than happy that the state picks up a chunk of the tab."

Offshore sand dredging is illegal in NSW without a mining licence.

Mr Barilaro said he was keen to "have a chat" with lord mayor Nuatali Nelmes and council chief executive Jeremy Bath "so they understand the process".

"The next stage now is the state government won't be the proponent because that was never the intention," he said.

"Newcastle council will have to be the proponent, to put the application in for what will be a DA for a mining licence.

"This will be the first time this has been done in NSW, so this will be significant.

"We will then, as the state, support Newcastle, so whatever resources they need, we'll get in behind it."

Mr Barilaro's comments mark a major breakthrough in the long-running debate over who will pay to fix Stockton's worsening erosion crisis.

City of Newcastle released a report last year which said it would cost $21 million for an initial replenishment program then $12 million every decade to keep sand on the beach.

Documents released in May under freedom-of-information laws showed that $34 million of the $72 million Coastal and Estuary Grants Program remained unspent since the government set it up in 2016 to help councils address coastal erosion.

Mr Barilaro said last year that offshore sand dredging was the "only viable long-term solution" for Stockton's woes.

On Wednesday, he said dredging was "significantly closer" after government scientists identified suitable sand sources.

Experts agree that the erosion problem is largely caused by the Harbour-entrance breakwaters, State government infrastructure, trapping sand at Nobbys.

Under current legislation, offshore sand is classified as a mineral and its exploration and recovery from NSW coastal waters requires an exploration licence and mining licence respectively, under the Offshore Minerals Act 1999.

An exploration licence to identify suitable sand was granted in February, funded from $1 million announced by the NSW government for Stockton beach in March last year.

"The options announced today will now be reviewed by the City of Newcastle as part of its plan to tackle erosion at Stockton Beach," Mr Barilaro said.

"These results follow a six-week exploration program carried out earlier this year, and information about the options will be provided to the City of Newcastle council to consider its next steps to improving the beach."

The Geological Survey of NSW, in the Department of Regional NSW, applied for an offshore exploration licence in December after identifying a 60-square kilometre survey area as the largest nearby offshore sand resource.

Its scientists found three suitable sources, the "inner-shelf plain sand sheet, old barrier sands and Hunter River sands".

The inner-shelf sand is abundant in Stockton Bight, occurs as broad ridges on the sea floor and is very similar to what is on the beach now.

The barrier sands are old beach and dune sand found in deeper water north of Pinnacles Reef, which is about 4km north-east of the harbour entrance.

These sands are up to 10 metres thick on the sea floor and are often covered by the younger, inner-shelf sand.

The river sands are found mixed with marine sands between the harbour entrance and Pinnacles Reef.

The survey crew analysed the seabed up to 5.5 kilometres off Stockton Bight to determine the thickness of sand deposits and whether the grains were the right size to stop them from washing away if shifted to the troubled zone.

The survey, which began in March, assessed 91 surface samples and 44 core samples for sand size and colour.

Mr Barilaro said the exploration and survey techniques could be used to protect and preserve other beaches.

He said the work to tackle erosion at Stockton was breaking new ground in NSW.

"Exploration has provided us with this critical information that could help resolve decades of erosion issues at Stockton Beach, and it would be fantastic if this approach could be used to ensure other beaches can be enjoyed for many more years to come," he said.

He said using offshore sand was a "tried and tested" approach for replenishing beaches in the US and Europe.

Research conducted last year for the Newcastle Herald found sand loss from the beach had been grossly underestimated.

A comparison of NSW government seabed survey data found that between 2000 and 2018 on average 85,300 cubic metres of sand, or 136,500 tonnes, was lost from the beach every year, which is more than double previous predictions.

University of Newcastle's Dr Ian Taggart and Anditi managing director Peter Jamieson said the beach could "easily take 2 million cubic metres of sand", or four times what was earlier predicted.

They warned that as the seabed continues to drop, larger waves will reach the shore wreaking havoc on Stockton's already crippled coastline and smaller storms will do much greater damage.

Mr Jamieson, a former environmental consultant who authored the 2002 Shifting Sands at Stockton Beach report commissioned by Newcastle council, said authorities had "stuck their heads in the sand for too long".

"We knew there was significant erosion up until 2000 and there was argument about the volume and magnitude," he said.

"What we didn't know then is how fast it is occurring over such a large area. The sand losses are bigger than thought and it's happening in much deeper water, the trends are clear and it's much worse than what people believe."

Erosion forced the permanent closure of Stockton's only child-care centre in late 2019 after engineers deemed the building unsafe. The service has not been replaced.

The Mitchell St rock wall, the suburb's last main line of defence that was built 30 years ago, is dropping and falling forward.

City of Newcastle will use 6600 tonnes of rocks in an attempt to stabilise the wall later this year to protect dozens of homes and a main gas line.

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