A new location on Lake Macquarie for the Myuna Bay Sport and Recreation Centre has been selected near Morisset.
The original centre was a popular camp for generations of New South Wales children, catering to tens of thousands of kids each year since 1944.
It was controversially closed in 2019 after the enormous coal ash dam at the neighbouring Origin Energy's Eraring power station was deemed an earthquake risk.
Origin Energy and the NSW Office of Sport then agreed to build a replacement centre at nearby Eraring, but that faced strong backlash from Eraring residents.
Lake Macquarie MP Greg Piper said the new site would be off Morisset Park Road between the Morisset Hospital land and Bonnells Bay Public School.
"Today I'll be joined by the new Minister for Sport, Stuart Ayres, who will formally announce that all parties have agreed with my proposition to build a new sport and recreation hub at Morisset and not at Eraring," he said.
"I can confirm that the new site and its facilities will be open to the local community and not restricted in the way that the Myuna Bay site was.
Origin Energy will fund the new facility, which is likely to include sports fields, an indoor sports hall, pool, bike and walking trails.
Planning and feasibility studies have not been completed.
Mr Piper said there would also be an extensive consultation process.
The 30-hectare site was former farmland owned by the Morisset Hospital and was gazetted a State Recreation Area in the early 1990s and handed over to National Parks.
Mr Piper said the area had been heavily grazed in the past and little attention had been paid to it over the past 30 years.
"While mostly cleared but currently degraded with weeds, it offers a perfect setting for something like a sport and recreation centre with good lake access and amenity," he said.
"I'm very pleased that we're getting such a fantastic outcome on this issue.
"This will be the first new sport and recreation facility built in NSW in more than 40 years, and is something I know our local community deserves and will really enjoy."