Local councils across the state were to originally fund the $13.6 million increase to the levy, which aims to fund new workers' compensation for firefighters suffering from work-related cancers.

However, the announcement from the state government means councils will now be due to pay the increased levy from the 2020-21 financial year onward.

Griffith mayor John Dal Broi welcomed the reprieve but said if the state government is fixated on ensuring councils cover the increase from next financial year, they need to give councils ample time to work the increase into their budgets.

"We had a win," he said.

"We have to make sure for the next year... we get fair warning.

"When you are funding programs, $80,000 can do a lot for the community of Griffith."

Griffith City Council's contribution to the emergency services levy for the 2019-20 financial year was assessed to be $466,512 after the levy hike - an increase of $82,058 or 17.6 per cent from the 2018-19 financial year.

The assessment from Revenue NSW was handed down in May, leaving the council with little time to implement the hike into the 2019-20 budget.

Local Government Minister Shelley Hancock said the delay in notifying councils of the intended increase to their levy contributions caused friction between local and state government.

"We acknowledge that many councils had already developed and approved their 2019-20 budgets before the invoices for the increased emergency services levy were issued and this has caused some angst," she said.

Mrs Hancock said the government intends to further consult with local councils to manage the impact of the increased levy going forward.

Cr Dal Broi called for a gradual increase to the levy contribution, which could fall under the maximum amount councils are allowed to increase rates each year.

The Independent Pricing and Regulatory Tribunal pegged the rate increase for the 2019-20 financial year at 2.7 per cent.

Cr Dal Broi said while council can cover the increase, some services may need to be reduced in the short-term to accommodate the added expense.

"We can cover it but by covering that amount, we will have to trim some of our programs and the community will miss out," he said.

Opposition treasury spokesman Walt Secord slammed the decision by the state government, stating the decision was not a long-term solution.

"This is a crafty and cruel hoax on local government, with the Berejiklian Government just kicking the can down the road for another year," he said.

Deputy Premier John Barilaro announced the state government will cover the increase on Tuesday after backlash from local councils.

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Local Government NSW President Linda Scott said while the body supports the introduction of broader compensation laws, they condone the manner in which the state government implemented the levy increase.

"These massive levy increases came without consultation or warning," she said.

"The first time councils knew they would be asked to cover the increase was when they opened the bill from Revenue NSW and saw levy spikes of up to $220,000.

"These bills arrived well after most councils had finalised their Budgets for 2019/20, leaving them no option but to cut funding for other areas such as infrastructure maintenance or services."

Cr Scott said levy increases ranged between 11 and 25 per cent depending on the council, with regional and rural councils among the hardest hit by the increase.

Contribution from local councils makes up 11.7 per cent of the state's emergency services budget.

Plans for a new system to fund emergency services by passing the levy increase onto property owners rather than insurance policy owners was shelved by the state government in 2017.

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