The council has approved a new hall-hire plan that would mean Minmi Crochet/Craft Group pay up to $80 a day to use the local hall, as well as a $200 security bond fee and a $110 key deposit charge from July 1.

The seven retirees have been using Minmi Progress Hall once a week for the past seven years to knit scarves, gloves, baby rugs and teddy bears for Hunter Homeless Connect - a volunteer group that provides support for the region's homeless and displaced.

Until now, the knitters paid a voluntary fee of $2 per person a day to use the hall, or up to $680 a year, to make their wares for the homeless.

Minmi Crochet/Craft Group's Dianne Holden said the council's fee hike was a disgrace.

"We're not a drain on society, we are giving something back," she said.

"We should be able to come to some sort of financial agreement [with the council] that we can afford."

Halls across Newcastle were reviewed this month by the council as it tried to claw back millions of dollars in its budget.

Under the Local Government Act, the council sets the fees for the use of all community facilities and the managing bodies are required to charge these fees to hall users.

Minmi Progress Hall is a Newcastle council-owned community facility and operated under the Minmi Progress Association.

A council spokesperson said the community hire fee of $10 per hour to use Minmi Progress Hall had been in place for a number of years.

Under the new arrangements, all users of community facilities will be required to pay a security deposit and a key deposit, which is refundable at completion of the hire and return of the key, they said.

"The security bond and key deposit have been introduced to maintain consistency across all community facilities and allow for cost recovery in case of damage to the hall or need to replace keys."

The spokesperson said the hire fees contributed to operation and maintenance for each facility, and were reviewed annually to maintain "consistency and equity" across the region.