Dubbo City Council set the details on Monday night for its residential development as part of a suite of measures to address housing affordability. It also voted to reduce a building covenant to 150 square metres on the remaining 23 lots in the release and set other conditions on building.

The 10 lots offered by ballot will not include size in the covenant. Potential purchasers must qualify for either the NSW government's First Home Owner Grant or meet an income requirement to be eligible for the $10,000 subsidy. Dubbo mayor Mathew Dickerson said the council was responding to a need.

"This is an attempt by council to do something that's been talked about as a housing affordability problem in Dubbo," Cr Dickerson said.

"It's not unique to Dubbo but this is our attempt to try to something in the market."