Councils are pushing up the cost of new homes by claiming large sums to approve large residential buildings – a practice that can hold the planning process "to ransom", the NSW Planning Minister has warned.

Rob Stokes said on Friday he was moving to rein in the growing use of little-publicised "Voluntary Planning Agreements", which the development industry says can add tens of thousands of dollars to new apartments.

The agreements allow councils to strike deals with developers who trade infrastructure contributions or cash transfers in exchange for approving development projects that exceed planning limits.

"We have a case where assessment processes are being held to ransom, increasing costs for new homes by up to thousands – a cost being borne, in the end, by home buyers," Mr Stokes said.