A state and local government reference group suggested Newcastle City Council's Queens Wharf and two state government sites, at Dyke Point and the old Pilot Station.

Councillors will decide on Tuesday whether to contribute $20,000 towards a feasibility study.

The state government is also expected to contribute $20,000.

Dredging, berth building and shore-side service costs would be assessed, as would potential revenue from port charges and leases.

Independent councillor Aaron Buman, who with Labor colleagues called for a feasibility study, said there was opportunity to increase the city's appeal as a destination and boost investment and jobs.

"A permanent cruise terminal built in the CBD would lead to greater investment in tourist accommodation [and] hotels and boutique ventures would follow," he said.

"Supplying more accommodation would lead to an expansion in other tourism opportunities."

A conference centre might be built with the cruise terminal, Cr Buman said.

P&O Cruises announced last month it would cut luxury liner Pacific Sun's 2011 Newcastle season from six cruises to four because of costs associated with temporary customs and terminal spaces.

Cr Buman said while economics influenced that decision, a permanent cruise terminal might have helped keep the extra cruises to Newcastle.