Diane Wyatt, from the Tamworth Mental Health Carer's Support Group, who has been lobbying for a new facility since 2018, said that means the project can finally move into the design phase.

In 2019, the government promised a state-wide $700 million infrastructure upgrade budget would fund the project, with Minister for Mental Health Bronwyn Taylor saying building the new facility was a "very high priority".

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But the project has been on hold until completion of a Clinical Services Plan, a massive region-wide program of consultation and planning, assessing mental healthcare needs across the New England and North West.

Mrs Wyatt revealed on Thursday she had been told by the Minister that the process had been completed.

That means the upgrade can go into the next stage - beginning the formal design both of the region's mental health services and the new building.

Mrs Wyatt will lobby government to fund a 50-bed institution, double its current capacity, saying the institution will cater to a vast region from Murrurundi to the Queensland border.

"We get the building, but the services are for the whole area," she said.

"Last count there were 196,000 people in that area. I'm sure it's more than that now, because that was three years ago. When you think about it, if you've only got 25 beds to do 196,000 people, it's not much."

It's also important the new facility be "co-located" with Tamworth's hospital, she said. At the moment, patients sometimes have to be taken in a car or ambulance from the emergency unit to Banksia, which she said made some patients feel like inmates.

It's not clear how long this process will take, she said, but it will surely blow out a 2018 hope the new building could be open as soon as 2022.

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Asked if she was excited the project was going to the next stage, she said "I won't get really excited until I can see actually some plans on paper and we know where it's going to be built, then I will get really excited."

A spokesperson for Minister for Mental Health Bronwyn Taylor said more information will be coming soon on the upgrade.

Over 12,380 people, many Tamworth locals, signed Mrs Wyatt's 2018 petition demanding the government fund an upgrade of a building she said was akin to a prison.

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