The road runs around Wangi peninsula and is regularly used by locals, tourists travelling to Wangi Point Lakeside Holiday Park, and as a bus route.

Some of the potholes are up to 1.5 metres wide and 20 centimetres deep.

In other places, the bitumen has been completely eroded.

Wangi Wangi resident Ray Nelson said the "eyesore" was more like a four-wheel-drive test track than a main road.

"If you were a tourist and you came down this road you would be thinking 'what on earth am I doing here?"' Mr Nelson said.

"It's a shame really, because it's a beautiful area."

As that section of the road runs through the conservation area, it is the responsibility of the NSW National Parks and Wildlife Services (NPWS).

A NPWS spokesperson said they were aware of the condition of Watkins Road and considered it a lower priority.

"Repairs are required, however these are considered a lower priority as resources are currently focused on other areas.

"The NPWS priorities are clearing visitor access roads and trails of storm damage, particularly in western Lake Macquarie, Jilliby and the Watagans. There is a significant amount of work that is expected to take many weeks."

While NPWS gave no indication of whether repair work was planned for the road, Lake Macquarie City Council said it required reconstruction.

The council has prepared a solution to reconstruct the road but requires a determination from NPWS before it can undertake the project.

"Council has offered to undertake that work and recoup the cost from Park Operations, but requires a lease over the caravan park of suitable duration to make it commercially sensible," a council spokesperson said.

"NPWS are yet to determine whether they will offer an extended lease to council."