The school project aims to cater for current and projected growth in the area and will deliver 20 new permanent class rooms, upgraded administration facilities, library, canteen, student toilets and outdoor learning areas.

The upgrade will accommodate up to 875 students in permanent classrooms. The school currently has an enrollment of 738 students.

Read more: 'It is dangerous': Residents furious over Dapto school upgrade

As reported in the Mercury, Horsley residents fear traffic in peak school times will become unbearable on the nearby narrow streets.

Residents including Allan Timbs and Glen Bradley are also concerned because the new building, which will accommodate the 20 classrooms, will be three storeys and they believe it does not fit in with the character of the Horsley neighbourhood.

Other concerns include overcrowding of the school site, temporary construction noise and insufficient community consultation.

"I am sympathetic to the concerns and I have raised the issues with the Department of Education," Ms Watson said.

"I completely agree that extra traffic congestion will be created. Traffic will be at a standstill in school drop off and pick up times and the school is located in an awkward spot and the roads are narrow.

"There is a fear a student will be injured.

"Also, the noise that will be created once the new building is constructed is a concern because it will be located close to existing properties."

Ms Watson has encouraged residents to make submissions about the proposal when the development application for the project goes on public exhibition with Wollongong City Council.

Read more: Nearly 1000 homes planned for next stage of West Dapto development

West Dapto is expected to be home to over 50,000 people in 19,000 new homes when the suburb is established.

The West Dapto Masterplan predicted an eventual need for eight new primary schools and three new high schools in the area.

"Whilst I welcome any funding for public education in the Shellharbour electorate, West Dapto desperately needs a new school to cater for the long-term future needs of the local community," Mr Watson said.

"I've been fighting for a new school for the area since my election back in 2011. That fight isn't over.

"The government needs to identify and purchase land for a new public school in West Dapto.

"This government seems to be kicking residents in the guts."

Ms Watson said in March this year, NSW Labor promised that if elected they would spend $60 million on the planning and construction of a new school in West Dapto.

NSW Liberals did not match the commitment.

"The government needs to keep up with the population growth," the MP said.

"This government seems to be money-minded and it is a dumb idea to wait for the population to be there and then construct schools considering schools take years to build.

"Now is the time to start planning. I'm calling on the government to purchase land now with a view to start construction soon and not wait for the population explosion happens."