Around 100 people gathered at a public meeting in Kiama on Thursday night to oppose the potential sale of the site.

Among the speakers were John Ashworth, chair of the Blue Haven Residents Committee, Gilmore MP Fiona Phillps, Shellharbour MP Anna Watson, former Kiama mayor and general manager Brian Petschler and South Coast Labour Council Secretary Arthur Rorris.

Kiama CEO Jane Stroud was invited to attend but declined.

In early May, council voted to sell off Blue Haven in a bid to shore up its financial situation.

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Two weeks later, that decision was revised, with council deciding to look at all the options in relation to Blue Haven.

Mr Ashworth referred to the initial motion to sell as "the most despicable, heartless and cruel" ever passed by Kiama council.

"The motion's been amended but the underlying threat to sell Blue Haven is really there, subject to a few reservations and conditions," Mr Ashworth said.

He said residents were "living on the edge", unsure of what may lie in the future.

"This isn't just Blue Haven, just some bricks and mortar - it's our home," he said.

"It's where we live. It's where we want to live for the remaining years of our life and we want to live in peace and security.

"That peace and security has been shattered by this council."

He wanted council to scrap plans to sell Blue Haven.

"Take it completely off the agenda without any reservations or conditions," he said.

"Just take it off the agenda and then we can get on with our business and the council can get on with their business."

Mr Rorris said he had never seen a situation where a government made a decision that would affect half its workforce behind closed doors and without any advance consultation.

He told the meeting the unions that formed the South Coast Labour Council would "back you in all the way".

"This is going to be a fight and it's all-in," he said. "Let's be under no illusions that this is going to go away."

Mr Petschler was one of three former mayors who wrote a joint letter of concern over the sale - which they felt didn't need to happen.

"We made it clear that both the aged care facility and the retirement village can be saved - council does not need to sell either," he said.

"We think there are some economies that could be achieved and we think they could trade out of the deficit in a relatively short time."

At the meeting a petition to be directed to NSW Local Government Minister Wendy Tuckerman and federal Aged Care Minister Ron Colbeck called the plan to sell off Blue Haven as "deplorable".

It called on state and federal governments to intervene to keep Blue Haven in public hands.

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