NEW homes could be approved within 10 days under radical changes to planning laws that are tipped to spark a construction boom in Sydney.

In a bid to address the state's housing shortage and affordability crisis, councils will be forced to give the green light to 80 per cent of all suitable NSW buildings in just 25 days, according to a state government white paper to be released today.

As long as new homes and renovations are under two storeys and do not affect neighbours with overshadowing or privacy issues, authorities will have to give their rulings within 10 days or risk losing decision-making powers on major projects.

Suitable apartments in town centres, developments of up to 20 townhouses, new shops and land subdivisions will also get the go-ahead in less than a month.

Councils currently take an average of 71 days to decide on new development, from garages to subdivisions, and more than eight months on developments worth more than $5 million, such as apartment blocks.

"If you put in a DA for a new house that meets all the requirements, you shouldn't have to wait for up to two or three months to get an approval like you do now," Planning Minister Brad Hazzard said.

"We expect our changes to the DA system will generate savings for the community and industry of up to $1.7 billion over the next 10 years."

Councils will also be forced to spend millions of dollars of infrastructure levies they have been hoarding - with the 43 Sydney councils accumulating $760 million paid by developers, earning $40 million in interest last year. Under the changes, authorities will only be able to charge infrastructure fees for essential roads, drainage and parks, instead of saving for decades for pet projects.

The state government has rejected calls to bring in a flat tax of $160 on every ratepayer in the state to fund $1.2 billion of infrastructure a year for new urban growth.

Instead, it will make dramatic changes to council taxes on new properties, forcing new apartments in the affluent east to pay infrastructure levies to stop western homebuyers copping up to $40,000 on the cost of their houses, while $2 million properties in the east pay just $5000.

At the moment, a $450,000 new house in Camden will cost homebuyers more than $40,000 in combined local and state infrastructure contributions, while the owners of a new three-bedroom, $2 million apartment in Double Bay would pay just over $5000 in local contributions.

"Whether you are in Camden or Collaroy, if your new development creates demand for infrastructure, you should make a modest contribution to the cost of new or upgraded infrastructure to support growth," Mr Hazzard said.

The white paper will allow NSW councils the chance to keep their powers to determine the fate of DAs worth up to $20 million.

However, they will be encouraged to appoint independent hearing and assessment panels in an effort to depoliticise local government decision making and "remove any potential corruption risks".

Originally published as Green light for homes in 10 days