The Bulli bottleneck, on the Princes Highway between Park Road and Station Street, is under investigation by Roads and Maritime Services.
The move comes after requests from residents and NSW Police to look at ways to alleviate the traffic congestion along the stretch of road to the north of the Memorial Drive junction.
"It includes a study into traffic flow, parking and road safety through the Bulli shopping precinct which will provide recommendations for future traffic management," an RMS spokesman said.
"The study will consider future development and traffic growth, congestion, crashes and the availability of parking. North and south of the shopping precinct will be included in the study."
It is understood that making the highway through Bulli's CBD a clearway in both directions during peak periods is an option.
The study, which began in October, is due to be completed "in the next few months".
The spokesman said the impact of the nearby Woolworths development, which is yet to be built, would also be taken into account.
"The Woolworths development will provide traffic signals at Organs Road," the spokesman said.
"RMS will consider this in the traffic study and will monitor conditions when the development is completed to ensure the congestion solutions are appropriate."
Karen Hillen, from the Northern Illawarra Chamber of Commerce, said congestion did not just happen during peak periods.
"It can be at different times," Ms Hillen said. "I find it tends to be the worst going through Thirroul and heading into Bulli and there can be a bit of congestion heading into peak hour, especially in the afternoon."
Ms Hillen said the chamber would not be in favour of a 24-hour clearway, which the RMS has said is not under consideration.
"I think that having clearways there would severely impact on the businesses along the road that are already doing it tough anyway," she said. "That might be something the RMS is considering but they definitely want to be looking at the impact on businesses along that strip there."
Rather than changing the clearway times, Ms Hillen said extending Memorial Drive to meet up with Bulli Pass Road was a better option.
She said such an approach would give northern residents an alternate route in and out of the city instead of having all traffic funnelled through the Bulli CBD.
It would also help to avoid traffic jams such as the one that occurred earlier this week when a truck lost its trailer on the highway at Bulli.
"It's a bit of a pain really if you've only got one way in and one way out and that's severely impacted," she said.
"It would certainly be fantastic to have an alternative means of getting to Wollongong if there is a major delay. Luckily they don't happen that often but when they do they can throw all the traffic into chaos."