The railroad is seeking approval to construct six tourist cabins and a managers residence on the site.

The plans also include a bed and breakfast suite and the construction of a public disabled toilet and shower.

Outlined in the tourism and accommodation report submitted to Shoalhaven Council, the objective of the development is to attract railroad fans from overseas and outside NSW.

"This proposal is to provide a viable bed and breakfast accommodation and cabins to facilitate continued enjoyment of the existing model railroad tourist infrastructure that has been operational for the past two decades," the report said.

"This proposal is specifically aimed at attracting model railroad fans especially from America, Canada, Europe, New Zealand and other states in Australia to self drive trains provided for this purpose."

According to the application for development consent the expansion is expected to cost between $850,000 and $900,000.

Around 24 years ago the Penwood facility began as a hobby by a group of like-minded friends.

Over the years it has since expanded and holds open days for families and kids on the first Sunday of every month.

The railway was closed for two years though in 2011 when, after a collision at the front of the property, the council instructed the Penwood group to stop holding open days until they had received council consent.

The property reopened to the public in 2013 after a new access road was built and has continued to operate since.