The move would complete the long-awaited return of top flight rugby league to Nelson Bay, following the demise of the Port Stephens Sharks before the 2015 season due to a player shortage.

It would also provide the Newcastle league with its largest first-grade competition since 2006.

The Hawks formed last season in a merger between the Nelson Bay Sharks and Indigenous club, the Newcastle Hawks. Initially the club entered an under-19s side, before expanding this season into reserve grade.

The Hawks are captain-coached by former Knights, Penrith and Gold Coast centre Brad Tighe, and are leading the reserve grade competition having lost just one of their 15 games.

The side plays out of Tomaree and trains in Raymond Terrace.

"They've been given the green light from our perspective to come into the competition next year in first grade, it's just got to get ticked off by NSWRL," Newcastle Rugby League CEO Charlie Haggett said.

The NSWRL is expected to ratify the Hawks' inclusion after August 31.

Haggett has held a long association with Port Stephens, having coached the Blues and Sharks and held administration roles with the clubs. He fully understands the financial and recruitment challenges the area faces.

However, he's confident the Hawks are sustainable.

"They have some significant sponsors in the form of Awabakal and Yarnteen," he said. "They've put in a five-year business plan, so they're well secured in their sponsorships for the next five years and they've already started signing some significant names."

First division rugby league has endured a turbulent past in Port Stephens. In 1989 the Wickham-based Northern Suburbs relocated to Nelson Bay as the Northern Blues.

The Blues played in three straight grand finals from 2004 to 2006, winning in 2005. In 2008 local rivals the Raymond Terrace Magpies left the first division and by 2011 the Blues were struggling to remain competitive.

That led to the formation of the Port Stephens Sharks to encompass both Nelson Bay and the Terrace, but player shortages came to bite the club after three seasons.

Haggett said the Newcastle league never gave up on Port Stephens.

"That area is the biggest area that's crying out for a pathways team and has been since the Port Stephens Sharks folded," he said.

"A lot of the juniors up there go to other sports once they get to a certain age or go to other clubs in Newcastle and have to travel. We're hopeful that creating a pathway up there will help keep more players in the game and create more interest."