A massive motorway extension has threatened one of the last remaining dairy farms in the Illawarra region of New South Wales, but a breakthrough has now presented itself in the form of a cow underpass.

The $630-million Albion Park Rail Bypass, one of the biggest regional infrastructure projects in NSW history, will soon be built through the middle of Craig Tate's dairy south of Wollongong.

Built as part of an extension of the Princes Motorway, the bypass will avoid 16 intersections at Albion Park Rail, a notorious pinch-point during peak hour and holiday periods for Sydneysiders travelling to the south coast.

In the path of the new motorway corridor are the third-generation farmer's home, dairy operations and 40 acres of his most productive land.

"It's a crying shame to see it being buried under a road, but that's how it is. It's very disheartening to see such beautiful land gone forever," Mr Tate said.

"Living on the coastal fringe, here, it's very fertile land around most of the waterways and it's slowly disappearing because of the urban encroachment.

"It's a really sad situation because you can't reproduce it."

Craig Tate's home and dairy facilities will be demolished to make way for the motorway extension. ( ABC Illawarra: Gavin Coote )

Now, following five years of negotiations with the NSW Government, the Tate family has secured a deal which will allow them to continue running the business.

As well as receiving compensation, a custom-built underpass will be incorporated into the road project, to ensure his 600-head herd of cattle can still access the rest of the property.

In a major win for the Tate family, a cow underpass will be incorporated into the Albion Park Rail Bypass. ( ABC Illawarra: Gavin Coote )

He said navigating the stock under a busy motorway would be an adjustment.

"Once we get them trained it shouldn't be a problem, but the first one or two times we get the cows under there it will be quite a challenge," Mr Tate said.

"There should be a gap between the northbound and southbound lanes, so it should actually throw some light through the bridge.

"But it's going to be a two to three year build, so it's going to be quite a challenge for us to continue doing what we do with a major road project being built at the same time."

More hurdles lay ahead in rapidly growing district

Working in an industry which is already facing big challenges, Mr Tate said accommodating a motorway through his property represented a "massive hurdle".

On top of this, thousands of new homes are being build on land surrounding the farm, posing other threats such as urban stormwater run-off.

It is also feared right-to-farm issues will arise, where neighbourhood complaints about agricultural practices and odours would impinge on farmers' operations.

The Tate dairy property is some of the last remaining farmland at Albion Park, bound by the Illawarra Escarpment and rapid urban growth. ( ABC Illawarra: Gavin Coote )

But Mr Tate, who produces 5.5 million litres of milk each year, counts his blessings and is determined to keep farming there.

"We're the second biggest producer within 150 kilometres of Sydney, so for food miles, we're in a unique situation being very close to the biggest market in Australia," he said.

While primarily designed to allow for the cattle to move under the motorway, the underpass will also allow for the transfer of gas, electricity and water.

Stock underpasses, along with wildlife crossings, have been used in other major transport projects such as the Pacific Highway upgrade.