"When [Dubbo MP] Dugald [Saunders] rang me I was having a quiet moment in my car. It was very moving to know the state government has supported us, our patients are so very thankful for this," MHS director Rod Crowfoot said.

"This funding is more than just the money, it's about the outcome of programs like this, for our patients coming from across NSW.

"We just had one family from the north coast who said to me 'I don't have to worry about mum because I know she's safe there and close to dad' and that reinforces it's not just about the money but the support this facility provides."

In other news: Dubbo's water situation labelled a 'scandal' as regions continue to fall behind the city

The NSW government is providing MHS with $2.5 million to deliver a purpose-built oncology accommodation precinct and meet the increasing need for accommodation of patients around the western area who require travel for treatment.

"We're committed to removing barriers to ensure everyone can get the care they need no matter where they live, one of those barriers has been affordable accommodation and that's exactly what this funding will help address," Mr Saunders said.

The 26 new rooms will more than double the current capacity of MHS.

The expansion will ensure help for more people like melanoma cancer patient Owen Campbell, who lives in remote Gwabegar, near Barradine, about 280 kilometres drive from Dubbo.

Mr Campbell said he is surviving cancer partly due to being able to stay at MHS during surgical operations at Dubbo Hospital.

"Without this place, a lot of country people will die so to get help from here, I am very grateful ... there are no doctors where I live," the 65-year-old sawmill employee said.

"It's very hard for country people when we get sick, and when we get sick very bad like me, I have to come to Dubbo."

In other news: 'Pockets of incidences': Multicultural groups welcome campaign to combat hate crimes

Parkes MP Mark Coulton made a promise that Macquarie Home Stay would receive $2.45 million in funding if the coalition won the election, however because they lost, the money disappeared.

Mr Crowfoot and the MHS board went public with their outcry after not receiving funding. Macquarie Home Stay had applied for funding under Round 6 of the Building Better Regions Fund (BBRF) as a back-up in case Labor won the election and Mr Coulton's commitment fell through. It was still waiting for the outcome of that application when the new Labor Government cut the BBRF program in the Federal Budget, dashing any hopes that the expansion would be funded anytime soon.

Mr Coulton said he was disappointed in the Labor Government because they not only "failed to match his commitment" to fund the MHS expansion, but they also scrapped the only program under which the project could still be funded.

On Monday, Mr Coulton issued a statement slamming Labor for "inaction on this critical project" and added "it just goes to show a complete lack of understanding of the needs of our rural and regional communities".

Mr Saunders said he was part of the earlier planning stage for MHS in 2011 and securing important funding to provide a "home away from home" facility for patients from remote towns was essential for the program's success.

"This is not just government funding, it's about [the needs] of the community. Service clubs and community groups have been fundraising like Tour D'Oroc providing some money, home cooking, home care help and socialisation [for patients and their families] so it is a community asset," Mr Saunders said.

"This is one of the proudest moments I have had in my role as an MP, I'm proud we've been able to support patients, their families, and carers ... I have been lucky enough to help provide this, it's tremendous for me."