The Geographical Names Board is seeking community feedback on the proposal to rename Coon Island and Coon Island Point.
Lake Macquarie City Council voted to proceed with replacing the names with Pirrita Island and Miners Point, and submitted an application to the names board to officially make the change.
The board said the proposal addressed concerns about the existing names being offensive.
"It is important that place names reflect community sensitivities, which can change over time," Geographical Names Board chair Narelle Underwood said.
"Names that could be considered offensive to individuals, or social, ethnic, religious and other groups are unacceptable, and we want to work with the community to address their concerns.
"We want to make sure everyone has an opportunity to provide their feedback on the proposed names."
The island was named after Herbert Greta Heaney, who lived on the island and was nicknamed "Coon" Heaney. It is believed the nickname was given to Mr Heaney as he worked in the mines and would come home with soot on his face.
Inspiration for the new names comes from the local area's history and native environment.
Pirrita is a local Awabakal word for oysters from the mangrove tree. It signifies the oysters growing on the mangrove bushes in this part of the lake.
Miners Point recognises the mining families who lived on the island between 1915 and 1974.
"Through place naming, communities have the opportunity to unlock past stories, preserve traditions, reawaken language and provide a sense of belonging and identity," Ms Underwood said.
The names board is seeking feedback to gauge community sentiment for the proposed names. Suggestions for alternative names are not being sought at this time.
All submissions received will be reviewed and considered. If the proposals are rejected, the board will work with council to find suitable alternatives.
Details of the proposal can be viewed, and submissions lodged on the board's website.
