For the first time, Tamworth Regional Council (TRC) has pushed for new development controls mandating a minimum of 10 homes per hectare at Arcadia Estate, pegged for the southern side of town near Warwick and Bylong roads.

The planning proposal, now up for public exhibition, is designed to provide more diversity to stem the city's housing crisis.

It will give developers flexibility to create a range of housing types and cater to growing demand, TRC development assessment team leader Mitchell Gillogly said.

"We're finding out at Windmill Hill and Moore Creek they're just rolling out those 670 to 680 hectare blocks and we aren't getting those smaller lots for people wanting one or two bedroom houses," he said.

"It is quite a unique development, we've never had the density control, or restricted lot yield control, and that's really to allow the developers the flexibility to go for small lots and big lots if they want and cater to what the market is doing at the time.

"It also gives council the opportunity to drive home housing prices, we need to have more one and two bedroom houses - that's a big thing that came out of Blueprint 100 and the Regional Housing Taskforce."

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With a maximum of 2,350 lots and a potential population of 5000, the council plans include a commercial centre with a supermarket, specialty retail, food and drink premises to support the growth.

The council is in the process of connecting infrastructure at the site so that come mid-year the planning controls will be set and developers can start to lodge applications.

About four years ago it spent upwards of $350,000 to buy several parcels of land to start widening roads, and installing drainage and wastewater infrastructure to service the estate.

Mr Gillogly said the plans were designed in collaboration with developers and stakeholders, and he hopes the community will put their two cents in on the project too.

"We wanted to drive home that there is an avenue to create these smaller houses," he said.

"We want them to provide more one and two bedroom houses in these areas."

Public exhibition on the development controls will close April 14.

Members of the public can make a submission on the proposal through the TRC website.

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