Mayor Russell Fitzpatrick has welcomed the approval saying the civil works will allow larger aircraft to land at Merimbula, something that was aimed at increasing visitor numbers to the shire.

"Securing the services of two major airlines was a big win for the area, and with Southern Regional Planning Panel approval, we can begin to fully maximise the potential of this upgraded facility," Cr Fitzpatrick said.

"While attracting an additional airline was a fantastic milestone, we are currently limited by the size of aircraft our runway can accommodate.

"This approval allows us to progress a 120-metre extension at each end of the runway, meaning QantasLink will be able to land Q400 aircraft at Merimbula airport.

Council has said it will now go out to tender for 'package 1' works which include the southern end runway extension embankment.

The work has been identified as environmentally sensitive. In a report to council last November, staff said the work "is dominated by earthworks in fill within the wetland area".

"It is technically critical, with significant engineering risk, including the potential for differential settlement. It is also environmentally sensitive. To reduce these risks, the work is desired to be delivered as far ahead of the other works as possible and by a contractor focused on achieving the strict environmental and engineering requirements," the staff report said.

Cr Fitzpatrick said the Southern Regional Planning Panel was satisfied the proposal addressed potential impacts to the lake and surrounds through a comprehensive Environmental Impact Statement.

"This five-year study looking at potential impacts a development of this scale could have on local ecology, Indigenous heritage and the shellfish industry left no stone unturned," he said.

The location of the southern extension works means it falls under the Biodiversity Conservation Act 2016 (BC Act). Work in sensitive areas which have been mapped under the Act can trigger either an offset in an alternative piece of biodiverse land which is given to the state government or a payment to the state government.

The Act commenced in August 2017, after funding for the runway was announced and was therefore not considered in the initial project estimates.

Council staff have estimated that $1 million should be allowed for the bio-diversity and fisheries offsets and have suggested that council lobby the state government to cover the cost.

Cr Fitzpatrick said that upon completion of the runway extension works council would proceed with the resurfacing of the entire runway and aprons "to ensure a more consistent and smoother surface for airlines to use".

Project services manager, Daniel Djikic said airlines had been informed of works to commence at the runway's southern end early in the new financial year.

"We are confident there will be no interruption to passenger and freight services during this stage of works," Mr Djikic said.

But he said that general aviation flights would be affected, and that council had contacted Merimbula-based general aviation users and businesses operating from the airport.

"Our next step is to invite tenders for the commencement of works. We have approval for the first stage and money in the bank thanks to federal and state government grants."

"We thank the NSW government for the $4.3 million investment through the Restart NSW Regional Tourism Infrastructure Program to fund the runway extension, and the Australian government for allocating $4.5 million through the Regional Airports Program to fund the resurfacing works."