Kiama MP Gareth Ward does not beleive the closure of the Gateway Caravan Park will cause a homelessness crisis in the region.
"The NSW Government does not use the Gateway Caravan Park for temporary accommodation," he said.
"The NSW Government is working hard to build more social housing in our region. An example of this is the new units that I recently opened on West Street in Nowra, developed in partnership with Anglicare.
"Rent Choice Youth and Rent Choice Start Safely packages are also available to support people who need assistance to rent in the private market.
"These programs have helped reduce the priority housing waitlist to about 60 people in the Nowra region."
Mr Ward said there was a housing supply issue in the region, and said the responsibility for that rested with Shoalhaven City Council.
"Part of the issue comes down to supply - we need council to also play its part in supporting development in the region so we can unlock more housing options," he said.
Shoalhaven Mayor Amanda Findley hit back, and said the NSW Government had not met the community's needs for social housing.
"The council is working its hardest to try and create the circumstances for affordable housing," she said.
"This crisis has been boiling for years, and COVID-19 has brought it to a head as people move from the cities to the Shoalhaven.
"On top of that, we have 300 families who had houses that were burnt down just 12 months ago.
"None of that is the council's fault.
"The state and federal governments have known for years they have a housing crisis on their hands and they've done nothing about it."
Gateway Caravan Park owner John Igneneri said the park was home to about 60 families who were not able to secure other accomodation.
The park has recently sold, and will be redeveloped into an accomodation and business tourism precinct.
"If those 60 people end up on the street in 12 months time, the government will need to do something about it," Mayor Findley said.
"We already have 300 families in our community who had their house burn down 12 months ago.
"We have 12 months to work on the closure of the Gateway. We can create housing opportunities on land already owned by the state government if they just put their shoulder to the wheel."
Any person who is homeless or at risk of homelessness and requiring accommodation should call Link2home on 1800 152 152.