The idea has outraged Hunter residents who are fighting with Housing NSW over its plans for multi-storey unit complexes in their streets.

Fassifern residents' spokesman Carl Sueli said it could be a recipe for disaster.

"It's incredible. Over the last few months we have pointed out all the flaws of the process," he said.

But developers welcomed the idea yesterday, saying they had been stuck with a "ponderous 1970s planning system" while the public sector had been allowed to go on a "blitzkrieg of planning approvals".

The State Government has self-approved 427 public housing units in the Hunter Region in the past year under the fast-tracking of Federal economic stimulus money.

Urban Taskforce chief executive Aaron Gadiel said the private sector should be able to do the same.

"Newcastle and the Hunter have a very good future with its strong links to mineral resources and there is strong demand for new housing," he said.

"And the greatest proportion of that demand is for private sector housing; people want to own their own homes or rent privately, not from Government."

NSW Premier Kristina Keneally said she would appoint an independent auditor to review the powers being used in NSW to implement the stimulus package.

The reviewer will be asked to "evaluate the benefits and other consequences" of applying the new rules to major transport projects, "significant commercial or even appropriate residential projects" Ms Keneally said.

Lake Macquarie Mayor and independent MP Greg Piper, warned yesterday against shutting councils out of the process.

"I would caution that in time to come, if the stimulus package spending was subjected to a serious audit we would find there's been substantial waste that's come out of it," he said.

"And it's not unique, if people go hell for leather and spend a heck of a lot of money under time stress and artificial deadlines they tend to make mistakes and there are unforeseen consequences."