Minister for the Illawarra John Ajaka and Liberal candidate for Shellharbour Mark Jones joined some of the preschool's 29 children to announce the government funding.

Director Karen Bizimovski said the cash would be put towards developing the second floor of the school's William Avenue building.

"[The money is] a great beginning to accessing the funds needed to develop our preschool further, providing more places and availability for families in our local area," she said.

The additional room would allow the centre to increase its capacity to 58 children a day.

Bellambi Point Community, Southern Suburbs Mobile and Winnanggay preschools were also awarded $5000.

The cash can be used to purchase additional resources, train staff, renew play equipment or help cover the cost of excursions.

"Children's future and education is something the Baird government invests heavily into and these funding boosts across the state, I am sure, will be welcomed by teachers, parents and children alike," Mr Ajaka said.

Mr Jones said 100 preschools across the state were receiving the cash to support the delivery of the federal government's Early Years Learning Framework.

"It is great to see preschools in the Illawarra, some that need it the most, receiving some of the funding," Mr Jones said.