The New South Wales Government is being urged to extend a developer levy to ease Sydney's affordable housing crisis.

Sydney Lord Mayor Clover Moore made the call at the Federation of Housing Associations conference on Thursday.

She said the city had so far only been allowed to levy the Green Square, Ultimo-Pyrmont and Southern Employment Lands developments.

Those projects were expected to produce up to 2,300 affordable housing units for low-income earners.

At the Green Square development 3 per cent of the total residential floor area was allocated to social housing.

For non-residential development the levy was 1 per cent.

Lord Mayor Moore told the conference it was a "tremendous missed opportunity" that the Government had not allowed the levy city-wide.

Government 'treading carefully' with developers

NSW Planning Minister Rob Stokes also addressed the conference in Sydney.

He said the Government had to tread carefully, but had not ruled out extending the affordable housing levy across the city and beyond.

"I've got to be very careful that the policy settings we take don't undermine the feasibility of development and then, as it were, cut off our nose to spite our face," he said.

The Government is reviewing the State Environmental Planning Policy on affordable housing, known as SEPP 70.

That enables councils to apply an affordable housing levy on developments in their area, but at present it is only operating in the Ultimo-Pyrmont and Green Square precincts.

Speakers at the conference urged the Government to use inclusionary zoning more widely.

The policy would require a share of newly constructed accommodation to be affordable for people on low to moderate incomes.

Mr Stokes said it could be part of the policy mix to increase affordable housing.

"My examination of these issues across the world is that no one single policy is by itself going to be sufficient, but certainly inclusionary zoning has its real uses," he said.

The conference adopted a target of creating 100,000 new affordable housing units over the next 20 years, to meet demand.