More than 3000 people, children and dogs lined the kilometre-long breakwater at the "red line rally" at Stockton beach on Sunday.

The community urged authorities to resolve a stalemate that has left people frustrated and angry that their beach's severe erosion problems have not been resolved.

A plan to put sand back on the beach has been stalled for two years over a disagreement between the City of Newcastle and NSW government over who should be responsible for the project.

The crowd wore red at the rally, representing a hazard erosion line for the town that has become a "clear and present danger".

People held placards and wore T-shirts, urging authorities to "step up" for Stockton, "build back the beach" and "less talk, more sand".

Stockton resident Christine Grainger attended the rally with her five grandchildren. She wants them to experience the beach like other generations have.

"I'm a born and bred Stockton girl. We used to get our feet burnt on the sand as we ran up from the huge beach. The beach was so wide, but it's just been eaten away," she said.

Mrs Grainger lives in the closest house to the breakwater, where an erosion crisis is putting assets along the foreshore at risk.

"I'm very concerned about the caravan park, which is right in front of my house."

Stockton resident Willow Forsyth, organiser of the rally, said the Pasha Bulker storm had swells of 13 metres, but "we're getting inundation at seven metres".

"No suburb is built for that kind of inundation. We know the disaster we're facing. It's a catastrophic exposure. It's a clear and present danger," Ms Forsyth said.

"We don't know when it will happen, but we are unprotected and defenceless until mass sand nourishment is started to fill the 15-million cubic metre hole in the front of Stockton."

Her message to the authorities was: "Start filling it and start filling it fast. Get together, collaborate, sort out who has the skills, get an active team and get passionate. Make it happen."

The state government is thought to be willing to fund the offshore sand nourishment plan, but it wants the City of Newcastle to submit a mining licence plan to extract the sand.

The council wants the government to develop a statewide sand nourishment program to "provide significant efficiencies and economies of scale for local councils", which would include "approvals and ownership of licensing for possible offshore sand extraction".

The residents believe the council should be standing up for Stockton.

Mrs Grainger said "this is really specific to Stockton".

"It just has to go ahead."

Fifth generation Stockton resident and businessman Lucas Gresham said residents were "in disbelief that we're still in this situation".

He said the lack of action was "gut-wrenching".

"You don't spend millions of dollars on studies to get near the finish line, then walk away."

He felt that the loss of sand on the beach meant the town's people were losing part of their identity.

"It's a whole different feeling," he said.

"We have the ability to fix this, we just need the funds."

The twin breakwaters - which stretch a kilometre into the sea - were built to protect the Port.

"They worked," Ms Forsyth said, but also caused the "massive sand bank in front of Stockton to slowly and gradually disappear".

"The Port and the NSW government's coal royalties are protected by the breakwaters. We don't have a problem with that, we're not asking for the breakwaters to go away.

"We're just saying, you've passed the risk to us. That's not OK. We've lost close to 15 million cubic metres of sand offshore of Stockton.

"We don't want to blame anyone any more for past inaction. We want you to get together, step up and do it.

"What we learnt this year from the east coast lows is that storm surge inundation happens now for us on a seven-metre swell. That's how fragile our offshore has become."

She said a dune system and wide beach "used to protect us, but now they're gone".

"Instead of the Stockton erosion story, we want to become the Stockton disaster risk reduction story, starting with mass sand nourishment to fill in the massive hole in the offshore sandbank.

"With that filled in, the beach will come back and we can build a few metres of sand dunes to protect us from inundation."