The Yallah interchange at the northern end of the Albion Park Rail Bypass is not a core part of the project, according to Gareth Ward.
The interchange will allow Dapto residents southbound access to the Albion Park Rail Bypass, which received planning approval last month.
Without the interchange, Dapto drivers would have to continue using the Princes Highway to head down the coast.
While there would be less traffic on the highway, motorists would still confront six sets of lights.
The bypass project has been put out to tender, with three companies on the shortlist.
Mr Ward, the Parliamentary Secretary for the Illawarra, said the companies had been told to consider the interchange – but not as a core component of the bypass.
“It’s been discussed as a supplementary item for consideration,” Mr Ward said.
“We’ve had a discussion with the tenderers and we’ve indicated we’d like them to consider it when costing the project but it needs to fit within the budget we have.”
Mr Ward said the focus of the bypass should be Albion Park Rail and not Dapto.
“This is not the Dapto bypass, it’s the Albion Park Rail Bypass,” he said.
“People of Dapto will be able to access the Princes Highway the same way they do now.
“Dapto was never in the original specifications. The traffic modelling doesn’t require it at this point – and we said we’d look at it.”
Roads and Maritime Services found current traffic volumes were not sufficient to warrant building the Yallah interchange at the same time as the bypass.
It could be added later as expected housing developments in the Yallah and West Dapto areas come online.
If that was to occur, Mr Ward said the cost of the interchange should not be borne by the government.
“If there are future developments coming online then developers should pay for any additional access to the highway not the state taxpayer,” Mr Ward said.