Heidi Thomson, Natural Resource and Sustainability Coordinator for Eurobodalla Shire Council, said stage one of the project will restore the first native flat oyster reef in NSW waters and the first intertidal oyster reef on the NSW South Coast, with the 'living shoreline' foreshore improvement works to follow.

"Around 1700 square metres of intertidal Sydney rock oyster reef habitat will be restored, using locally quarried rock and local sterile oyster shells, where wild Sydney rock oyster spat will settle over time and form a natural reef," Ms Thomson said.

"A further 1000 square metres of subtidal native flat oyster reef habitat will be created on the sea floor of the nearby 'Deep Hole'."

Once the sea floor reef habitat is established, the project will also create a jetty and platform which extends into the 'Deep Hole'.

The project is part of the Reef Builder initiative, which will rebuild 60 lost reefs. Once thriving ecosystems that supported local marine life in over 200 locations across Australia, today less than 10 per cent of shellreefs remain.

Simon Branigan, Operations Manager Oceans from The Nature Conservancy, said shellfish reefs are one of Australia's most critically endangered marine ecosystems, but can be saved from extinction.

"Restoring the oyster reef at Wagonga Inlet will be beneficial for both people and nature, by improving the water quality, providing marine life habitat, as well as providing an important natural defence for our coastline to reduce coastal erosion and damage from storms," Mr Branigan said.

The Wagonga Inlet Living Shoreline project is a collaboration between the Department of Primary Industries (DPI), the Eurobodalla Shire Council, and The Nature Conservancy Australia, with funding support from the Australian Government's Reef Builder initiative and the NSW Marine Estate Management Strategy.