Councils in Sydney and Wollongong are set to be stripped of the power to consider development applications worth $5 million or more under new rules mandating the use of independent planning panels.

NSW Planning Minister Anthony Roberts announced on Tuesday that so-called Independent Hearing and Assessment Panels (IHAPs) will become mandatory for all councils in Wollongong and Sydney.

The panels are already used by Wollongong council and 15 Sydney metropolitan councils on a voluntary basis.

The government has been considering whether to set a minimum value that would automatically trigger a referral to an IHAP.