Playmates Cottage says it has found a suitable site for the childcare centre to relocate to and it will make a new push for funding from the state government this week.
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Playmates management committee chairman Jim Jane said on Sunday the committee had made a decision about a block that was in "close proximity" to Dubbo Hospital, where the childcare centre holds a lease until the end of 2016.
He said any construction would be subject to a competitive tender process but they anticipated it would cost more than $1 million.
The committee chairman said they would be discussing the earmarked site with Dubbo MP and Deputy Premier Troy Grant at a meeting scheduled for later this week and that he looked forward to a funding announcement before the election on March 28.
In August Mr Grant said "the reality of the situation is that beyond December 2016 the expansion of the hospital means Playmates really does need to find a new home" and he pledged to find funding for a "bigger and better Playmates Cottage".
Health minister Jillian Skinner said in January progress was being made in the quest to find a new home for the childcare centre.
"They have a design and are looking at potential sites," she said then, after announcing $150 million in funding for stages three and four of Dubbo Hospital's redevelopment.
"Health Infrastructure has been paying for some of that."
On Sunday Mr Jane reported the update on the identification of a site, saying the committee was "feeling very positive".
"The committee has made a decision about a block that is suitable for our needs," he said.
"It's really good site, in close proximity to the hospital which will allow hospital workers with children at the centre to access it."
A draft plan had been developed for construction of a childcare facility on the site, he said.
The chairman counted the decision on the site as significant.
"We look forward to discussing with (Troy Grant) and hearing from him, now there is a site, what his plans are for the funding of the construction of a new Playmates," Mr Jane said.
"We look forward to an announcement about funding in the next week or two, certainly before the election, which is now less than four weeks away."
Mr Jane said about 40 per cent of children attending Playmates had a parent or parents who worked in health-related jobs at Dubbo.
"The committee is still of a view this is not the best result - the best result would have been to leave us where we are," he said.
"But given that's not going to happen, this is a great result for the community and we look forward to the issue being resolved by a funding announcement from the deputy premier."
