Member for Kiama Gareth Ward has launched a petition opposing any possible sale of David Berry Hospital as questions continue to be asked about the facility's future.
In recent days a government spokesperson said the age of the hospital meant it was no long suitable for such a use.
"David Berry Hospital was built in 1906," the spokesperson said.
"The layout of the buildings is outdated and cannot accommodate contemporary clinical requirements.
"The David Berry Hospital site is governed by legislation and the Illawarra Shoalhaven Local Health District will ensure that future-use options for the site comply with the legislation."
The spokesperson said "extensive community and stakeholder consultation" would take place during consideration of future uses of the site.
"Please note that consultation regarding future use of the David Berry Hospital site is separate, and in addition to, previous consultation which occurred with staff and the community regarding the relocation of clinical services to the expanded Shoalhaven Hospital campus," the spokesperson said.
Mr Ward the government was "treating our community like mugs".
"The government are 'consulting' about the removal of services from DBH after a decision has already been made, and they refuse to rule out a sale and advise the community what they intend to do with land that was gifted to the Berry community.
"I asked the Premier and his government one very simple question in Parliament last week, 'Will you sell off David Berry Hospital?' The Premier refused to answer the question," he said.
"We have the Minister for Health who is also the Minister for the Illawarra. He hasn't ruled out the sale of this site either and I call on him to do this today. I call on him to state his position not just as Minister for Health but as our region's advocate in cabinet.
"For years, Labor talked about needing an Illawarra voice in cabinet but what good has it done us?" Mr Ward asked
"I have been contacted by locals who wanted me to start this petition so they could vent their frustrations about our treatment over this really significant site.
"For many, DBH has deep personal significance as a place where people and families have said their last goodbyes to loved ones.
"The government is not treating this issue with the focus and sensitivity it deserves and this is deeply disappointing," Mr Ward said.