Member for Shellharbour Anna Watson has called on the state government to continue a $1 annual lease for the Warilla Child Care Centre to allow it to stay open.
Shellharbour City Council has rented the property at the peppercorn rate for almost 40 years, but since Housing NSW informed it the lease would increase to $40,000, the future of the centre has been in doubt.
A recommendation it be closed if another provider could not be found by October was put forward at Tuesday's council meeting, but councillors voted unanimously to delay the decision until September 2 to allow more time to consult with the community.
Ms Watson said she had been contacted by parents worried about what a closure would mean for their families.
She has called on Minister for Family and Community Services Gabrielle Upton to look into the lease renewal to give council "breathing space" while decisions about the centre are made.
"This is a centre that has been operating for nearly 40 years, that ensures children's educational needs are met prior to going to school, a centre that ensures their nutritional requirements are met. It's not simply a child-minding facility," she said.
Cr Kellie Marsh said she was planning to put forward a notice of motion for the council to write to the NSW government asking for the lease to be renewed.
But she said the council should absorb the cost if this did not happen, to allow the centre to remain open.