Contractors have begun digging at Lake Conjola's entrance, following an approval granted for Shoalhaven City Council to open the lake.
On Tuesday, South Coast MP Shelley Hancock said council had made an application six weeks ago to Lake Conjola, with approval from the NSW Government granted this week.
"After considering the application, and extensive lobbying, I am pleased the NSW Government has approved the request," Ms Hancock said.
The dig is occurring at what's known as mid-spit, further south than where the lake was opened on December 21.
Two trucks were hauling sand to the northern side of the beach, below the dunes of Cunjurong Point.
Retirees and residents watched the works from the southern dunes or along the Lake Conjola boardwalk.
Mrs Hancock has also secured $140,000 in grant funding to Shoalhaven City Council for future management of the lake.
She said the grant funding was for the council to prepare a coastal management program for the lake, and that the NSW Government would provide technical advice.
The grant is part of the state government's Coastal and Estuary Grants Program, which has $9.5 million for the development of coastal management programs.
A management program is the first step in council obtaining scientific information, which can be used, to develop effect management actions for the lake, she said.