At the same time, the government is calling for businesses, not-for-profits and members of the community to identify potential future uses for the land.

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The eight-hectare parcel of land - known as Kully Bay East park - is on the western side of King Street opposite the bulky goods shopping strip.

The site is listed by Sydney firm Savills and was first advertised on the Real Commercial website on Wednesday morning.

The listing noted there is a maximum building height limit of 20 metres and that foreshore access must be retained.

The government has said the land is surplus to requirements.

Deputy Secretary, Homes, Property and Development at the Department of Planning and Environment Leon Walker said a registration of interest (ROI) process had been launched to decide what to do with the site.

"We want businesses, community groups, not-for-profits and any other interested parties to take part in this ROI to activate and reinvigorate this site around Lake Illawarra," Mr Walker said.

"We know how popular Lake Illawarra and the foreshore is with the community, and we are excited to see what proposals are put forward to breathe new life into this part of the site."

The RIO website 20kingstreetwarrawong.com.au refers to the land by the tag of "Lakefront Precinct" and states this "represents a rare and unique opportunity to register your interest in relation to a highly sought-after site".

It also states the land provides "a blank canvas to create a substantial landmark development from a significantly underutilised existing site".

Property and Development NSW (PDNSW) acquired the site from the Lake Illawarra Authority after it was abolished in 2014.

It forms part of a larger acquisition from the lake authority, which is not up for sale.

Wollongong MP Paul Scully opposed the move and said the government should take no action before the March 2023 election.

"The government is rushing this process through over Christmas and early January while people are distracted with family and holiday plans which suggests they already have a secret plan in mind, days before a general election," Mr Scully said.

"The government could have asked for the views of stakeholders and the community on how to activate this land parcel at any time, by adopting the master plan process that I suggested to them nearly 18-months ago.

"I will not stand for a rushed sell-off of this prime publicly owned land parcel at Warrawong so that the NSW Liberals can plug an infrastructure funding black hole in Sydney."