Tomorrow's state budget announcements would include $1 million to plan for the bypass, according to Kiama Liberal MP Gareth Ward.

The sum follows an earlier allocation of $100,000 in last year's budget to start planning work.

Keira MP Ryan Park said the road needed to become a priority of the government and the new funding represented "the first step".

"This is an important step, it's an important first milestone and it's a road that is in desperate need of upgrade ... one of the worst roads in NSW and the country," he said.

"We do want to see it followed up shortly though with some money to start the proper construction works. We need the momentum to be maintained."

Shellharbour MP Anna Watson collected 500 signatures on a petition calling for the bypass.

She said the new funding represented a win for "people power".

"That $1 million is a direct result of people power," she said.

While welcoming the funding, Ms Watson questioned what the earlier, $100,000 sum had achieved.

"It seems that this government is really good at announcing studies, announcing the start dates - they've delivered nothing yet," she said.

According to Mr Ward, Road and Maritime Services was examining whether the road corridors identified on the council's Local Environmental plans were suitable for an upgrade of the highway between Yallah and Oak Flats. The corridors, announced 17 years ago, were being assessed in line with modern road design standards and land use development since then.