In June last year, the NSW government announced the Lake Illawarra Authority (LIA) would close and be replaced by an estuary management committee to be jointly formed by Wollongong City and Shellharbour City councils. 

A proposed structure included two councillors from each local government area, a community representative from each LGA, plus staff from each council and NSW government agencies.

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In December, Shellharbour councillors unanimously backed the proposed structure, but Wollongong councillors deferred making a decision, demanding a firmer financial commitment from the state government before doing the same.

Ms Watson said the stalemate had dragged on long enough and called on the state government to either establish the estuary management committee immediately or re-establish the authority.

"The only thing we are sure of is that there is absolute confusion about the replacement to the LIA," Ms Watson said.

"The future of Lake Illawarra will become the care of all but the responsibility of no-one ... this is precisely what happened nearly a quarter of a century ago when we first established an independent statutory authority with its own capital budget to manage Lake Illawarra."

A Wollongong City Council spokesman said Lord Mayor Gordon Bradbery had written to the state government seeking its commitment and financial help in managing the lake.

"No reply has been received to date," the spokesman said. A report on the lands and assets to be transferred from the LIA would be before council in April.

"This report will outline the options for a potential estuary management committee, the financial implications of this decision, and the need for a firm commitment from the state government for ongoing financial support."

In the meantime, council officers would work with staff from Shellharbour City Council and relevant state government agencies to manage the transition.