The NSW government committed a further $3.6 million to seal the road in last week's state budget, with Tamworth MP Kevin Anderson stating works could now get underway.

But Tamworth Regional Council (TRC) and Gunnedah Shire Council (GSC) say the battle for funding is not over, and they need an additional $1.4 million to fully seal the damaged road connecting Manilla to Boggabri.

Gunnedah mayor Jamie Chaffey told the Leader the current funding commitment from the state of $15.6 million would not cover the cost of fully sealing the road.

"My councillors are all coming together on Wednesday to discuss a position, but there is a shortfall of $1.4 million," he said.

"There's not enough money in what's been offered to do the total scope."

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A spokesperson for TRC said following the NSW government's budget announcement on June 21, the councils jointly contacted Transport for NSW asking them to "provide a pathway forward in light of the current funding shortfall for the Rangari Road upgrade".

"A further $3.6 million has been committed by the NSW government, however this remains insufficient to deliver the project in full," the spokesperson said.

"A response has not yet been received.

"Both TRC and GSC have previously authorised staff to award a contract for the work once sufficient funding has been received from the NSW government."

Tamworth mayor Russell Webb said that both councils will now discuss the funding issue further.

Transport for NSW has "rescoped" the project, Mr Anderson said, due to delays and an increase in the cost of building costs.

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