At its first meeting on Wednesday, the group resolved to put forward a motion at next month's council meeting, calling for the council to support businesses keen to go plastic-bag free.

Council staff have already had moderate success with stall operators at the Crown Street Mall markets, with several food vendors making the switch from polystyrene to cardboard food containers.

The group's chair, Cr Jill Merrin, hopes other retailers, particularly takeaway food stores, will take up the cause.

"I'd like to see them go to recyclable food containers as that polystyrene stuff is just terrible," she said.

"Just switching to cardboard and getting rid of plastic bags can make a big difference."

Cr Merrin is also working on a motion requesting the state government review its legislation on plastic bag bans.

At present, NSW law does not allow councils to apply bans or levies on plastic bags, leaving councils to simply encourage businesses to dump plastic bags.

She said South Australia, Tasmania and the Northern Territory have successfully legislated for councils to ban plastic bags, and that has created a huge reduction in plastic bags in other states.

"Victoria ran a trial and it reduced plastic bag use there by 79 per cent.

"Lobbying for better state and federal law is part of our role.

"So we're happy to write to the state government and ask them to improve the situation."

Cr Merrin is set to work with the waste group, including representatives from Ban the Bag Illawarra and the Surfrider Foundation, to educate businesses about the dangers of plastic bags.

She believes the Illawarra's coastal position and strong tourist market makes reducing plastic bag use even more necessary.

"Plastic bags and non-degradable food containers foul waterways and the ocean, killing birds and animals, and poisoning the fish we eat," she said.

"Most litter ends up in the ocean.

"I go swimming at Austinmer and I'm always picking up plastic rubbish; it doesn't just dirty the area but ends up being swallowed by animals."