New NSW premier Gladys Berejiklian has ditched plans to amalgamate regional councils, but will proceed with planned amalgamations in Sydney.

The 20 Sydney councils that have already amalgamated will remain.

Five mergers in Sydney that are facing legal challenges will go ahead if the legal action is unsuccessful.

Court challenges are underway in Woollahra, Randwick and Waverley in the eastern suburbs; Hunters Hill, Lane Cove and the City of Ryde in the inner north-west; and Mosman, North Sydney and Willoughby on the lower North Shore.

Berejiklian said a "one size fits all" approach would not work for councils as diverse as those in regional NSW and those in urban Sydney.

She said, "Local government reform is particularly important in Sydney if we are to deliver on our commitments to increase housing supply, improve planning and deliver local infrastructure and amenity to communities."

The decision to leave already completed mergers alone was welcomed by the property industry. Carol Hodgson, director of residential research with JLL, told The Australian Financial Review, "Council amalgamations can cause delays and possible confusion around who the approving authority is."

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