Blue Mountains mayor Mark Greenhill has announced council will fund a traffic study crucial to the possible reopening Blaxland War Memorial Park.
Despite indicating his preference for the study to be jointly funded by the state government, Transport for NSW countered that it was council's responsibility.
"We had hoped the state government, through the RMS, would contribute to the study but we have resolved to fund it ourselves," said the mayor.
But Transport for NSW Director West Alistair Lunn said council is responsible for the area proposed to be redeveloped, as it is not on a state highway.
"Funding for a traffic study undertaken on a road under the jurisdiction of council, is the responsibility of, and to be funded by council," he said.
Mr Lunn said Transport for NSW would continue to work closely with Blue Mountains City Council on the issue and "fully supports them carrying out a traffic study to start the process for the possible reopening of Blaxland War Memorial Park".
"We will review the results of the traffic study and work on solutions to improve pedestrian safety and access to the park in partnership with council."
The mayor announced plans for a traffic study in April after discussions with Transport for NSW.
Council has resolved several times to seek the reopening of the park but it remains state government land, bordered by the highway and railway line.
"Their lack of practical support has meant we have not been able to reopen the park. We can hardly spend ratepayers money redeveloping an area no one can get into," said the mayor.
"However, we believe this space has potential and we seek to prove it to the state government. On that basis we will do a traffic study that will ascertain whether pedestrian access is possible safely. That is the first stage.
"If this can be shown, we can then seek state government support for the capital works required for vehicle access off their highway.
"We have a real opportunity to make this plan a reality with the Crown Land Review where state government land, like the park, may be given over to council.
"Through proper planning, we would like to see this area, which was once a centrepiece of the Blaxland community, reopen for local families and visitors."
Council will commence the traffic study towards the end of the year.