The review proposes eight release area sites and roughly 34,000 new housing lots for Penrith's rural areas.

Planning Minister Brad Hazzard said the government late last year asked owners of land of more than 100 hectares and adjacent infrastructure to nominate sites that could be developed.

The Department of Planning received proposals for Mulgoa, Glenmore Park, Mount Vernon, Luddenham, Kemps Creek, Orchard Hills and Wallacia.

The council said the lots would be on top of the 25,000 already planned for Penrith.

Penrith mayor and Labor councillor Greg Davies described the move as "planning madness".

The sites would create "intolerable traffic congestion and place increased strain on services," Cr Davies said.

A council report said there was already a $1 billion shortfall in infrastructure to support existing communities, the population was growing faster than the number of jobs and Penrith's rural lands needed to be protected for the role they played in Sydney's food supply.

Labor councillors Prue Guillaume and John Thain both disagreed with the proposals — Cr Guillaume said the development would be "wildly inappropriate", and Cr Thain said it wasn't sustainable.

Mr Hazzard told the Star concerns raised would be worked through by the department with the council.

"If a proposal turns out to be inappropriate it won't proceed," he said.

Opposition Leader John Robertson, who was in Orchard Hills last week, said the government was breaking its promise of handing planning power back to councils.

But Mr Hazzard said councils would be responsible for assessing plans — depending on the proposal size — and it wasn't his intention to override everything.

Liberal councillor Ross Fowler said the government should be commended for its transparency, and MP Tanya Davies said the report showed the council was being brought into the fold.

Geoff Brown of the Western Sydney Conservation Alliance addressed Monday night's council meeting and said a lot of long-term residents of Penrith would feel the area was already full.

He said the new lots would clear farmland, bushland or both.

The council sent its submission to the Department of Planning on Friday.