Dredging started late last month.

A pipeline is pumping dredged sand to the beach in front of Illaroo Road, where it is being shaped into a dune.

Lake Cathie is identified as a coastal erosion hotspot.

Port Macquarie-Hastings Council is in the detailed design phase for its preferred coastal protection method, a seawall, but there is no funding yet to build the structure.

The dredging contractor, Dredging Solutions, is dredging a section of the lake east of the Ocean Drive bridge.

Lake Cathie Progress Association secretary Jack Jones said the dredging work had already brought out many tonnes of sand.

"Obviously it's going very well and the build-up of the dunes is great," he said.

Mr Jones said it would be a good move to vegetate the sand dune.

He said it would be nice to get the revetment wall built to tie-in with the beach replenishment but he recognised funding for a revetment wall was needed first.

The dredging project is funded by the state government and Port Macquarie-Hastings Council.