The council applied for a special rate variation of up to 8 per cent a year for five years including a 3 per cent rate peg.

The approval will see the average residential rate in Newcastle rise by $504 a year by 2019.

It will deliver about $300 million in additional funds to the council.

This money is earmarked for the revitalisation of Hunter Street and Newcastle coast including Bather's Way, Blackbutt Reserve, bike lanes and cycle paths, the restoration of city hall, new footpaths and roads.

The rate rise of 8 per cent will take effect from July 1 this year.