A planning proposal to rezone land at Daphne Park was given support by councillors at the February ordinary meeting and is now in the hands of the NSW Minister of Planning.

If given the green light, the plans will be put on display to the public for at least 14 days and submissions from the public will be accepted.

Council will then make their final decision.

The land at Daphne Park is Crown land controlled by council, and is currently zoned RE1 Public Recreation, which prevents any expansion but the rezoning would see it become R1 General Residential.

A concerned resident who lives near the preschool approached the Daily Liberal because she was worried the expansion would eat into the city's parklands.

Georgia Bryan said the land had been zoned as Public Recreation for a reason and she did not want the rezoning to happen without other residents being given the opportunity to have their say.

The preschool received a grant of $907,000 from the NSW government to allow it to build two classrooms and a staff room, and they had been awarded an interest-free loan of $91,000 to cover the costs of the rezoning application, development application and other fees.

Ms Bryan said she was surprised by the amount of assistance the preschool had received.

She pointed out a claim on Daphne Park had been lodged by the Dubbo Local Aboriginal Lands Council (LALC), but a day after the government grant was awarded to the preschool, the claim was revised to exclude the 2200-square metre section being requested for rezoning by the preschool.

Dubbo LALC chief executive officer Darren Toomey confirmed the decision was made to drop that parcel of land from the claim at the request of Dubbo MP Troy Grant.

"A claim had been made for Daphne Park but after negotiations and looking at the bigger picture, we decided to partially withdraw the claim," he said.

"The overall decision was made because we recognise it is about working together. We recognise the need for preschool places in Dubbo so we can see the benefit the expansion would provide."

DCC director of community services, David Dwyer, said the preschool had been treated the same as any other non-government organisation residing on council-owned land.

He said it was common for council to provide loans to help community groups and assist them with planning proposals.

Mr Dwyer said if the rezoning was approved and the preschool expanded, there would still be more than 5700 square metres of land available for public recreation at Daphne Park, including a playground, which is scheduled for replacement during 2015-16.

A previous expansion by Dubbo and District Preschool onto a portion of Daphne Park was completed in 1963, before the land was rezoned as Public Recreation, Mr Dwyer said.