The NSW government's main transport agency plans to sell 64 Mackie Avenue in New Lambton and recently approached Newcastle council about purchasing a small part of the property.

Transport for NSW wanted council to pay $140,000 for 157 square-metres as a footpath and bus shelter are built on the land and there is insufficient room to relocate the council assets into the road reserve.

The price came from an independent valuation but the elected council chose not to proceed with the purchase last month.

The lord mayor said $140,000 was a "steep ask" and the council resolved to advocate for the land to be transferred at "no cost".

"I don't really see that all options have been explored ... or it is necessarily a wise use of our funds to spend $140,000 on a footpath that already exists, that we built, so Transport for NSW can sell the land for-profit to the private sector," she said.

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While it was not mentioned in the council meeting report, the property once formed part of a decades-old plan for a bridge over the railway.

According the Herald's archives, a corridor of land was earmarked to accommodate an overpass as far back as the 1950s.

A Northumberland County district map dated 1955 showed it could have been built by deviating Glebe Road at Bourke Street in Adamstown and relinking it at the intersection of Mackie Avenue and St James Road in New Lambton.

Newcastle council endorsed a plan which followed a similar line in 1995, proposing a roundabout off Glebe Road with the overpass crossing Court Street, the rail line and ending in a Mackie Avenue-St James Road roundabout.

But despite winning initial council approval, adequate funding never materialised.

The council eventually removed the road reserve from its Local Environmental Plan in 2003 after staff said the work was unlikely to meet the RTA's cost/benefit requirements.

Multiple properties had been owned by the state up until that time.

Sales records show a number of properties have recently been sold on the New Lambton side of the rail line, at least one of which - 20 St James Road - was owned by Transport for NSW.

That property, which sold in February for $687,500, borders 64 Mackie Avenue.

Transport for NSW refused to say how many properties the state had sold over the past decade, but 64 Mackie Avenue appears to be one of, if not, the last linked to the overpass plan.

It said council had been offered the land featuring the footpath and bus shelter at market value and it would work to finalise a sale.

The broader block will be auctioned within a year.

"Transport for NSW acquired a number of properties for a possible rail overbridge. Plans to build a rail overbridge were removed from the Newcastle LEP by Newcastle City Council," an agency spokesperson said.

"Given that plans have been reassessed, Transport for NSW is selling properties which are surplus to requirements in line with NSW government policy."

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