The "appalling" waiting lists for affordable housing in the Illawarra need to be addressed urgently, according to the region's community services peak body.

Illawarra Forum chief executive Nicky Sloan said affordable housing has long been the No. 1 concern for its 300 community organisations.

"I think it [the waiting list] is something like 10 years for a house. That is just appalling," Ms Sloan said.

"We survey them [organisations] quite regularly and every time affordable housing is the No. 1 issue because you can't treat anything else before this issue is fixed.

"You can't treat anybody's mental health issues unless they've got somewhere stable to live. You can't be treating domestic violence unless you have got that woman and those children housed somewhere safe so it impacts on every kind of service delivery, it is such an important issue."

Ms Sloan's comments follow hot on the heels of new figures revealing a large drop in the number of NSW households with access to social housing.

Council of Social Service of NSW (NCOSS) deputy CEO John Mikelsons said figures in the 2013-14 Family and Community Services Annual Report show the number of households in social housing had dropped by 2341 over two years.

"This is despite nearly 60,000 households remaining on the waiting list to be housed, a number that is on the rise. It is clear NSW is becoming less and less capable of meeting demand for social housing - it's time to take action."

This view is shared by Ms Sloan, who said there needed to be more affordable housing available across the board.

"That means there has to be housing that is affordable for people to buy, rental accommodation that is affordable and there has got to be an adequate supply of social housing," Ms Sloan said.

"If we could tackle those three things simultaneously it would have a significant impact on people's lives."

The Illawarra Forum was formulating a "region-wide" response to the state government's recently released discussion paper looking at options to improve the social housing system.

On November 18, NSW Family and Community Services Minister Gabrielle Upton unveiled Social Housing in NSW: A discussion paper for input and comment, to guide future directions in social housing.

Ms Upton said the paper was based on three pillars - a social housing system that provides opportunity and pathways for client independence, a social housing system that is fair and a social housing system that is sustainable.

"When we took office we inherited a massive maintenance backlog, an unfair system and housing properties that are often not fit for purpose ... however, the simple truth is that the system has failed to keep pace with increased demand and changing demographics," she said.

People can make submissions on the discussion paper by visiting www.facs.nsw.gov.au before February 20, 2015.