COUNCILS will need to be careful how they spend their Federal Government infrastructure grants so they do not create maintenance cost problems for themselves in the future, the president of the NSW Shires Association said yesterday.

Councillor Bruce Miller of Cowra Shire Council made the comment after addressing a meeting of the association's 13 G Division councils in Wagga yesterday.

Cr Miller congratulated the Federal Government on its economic stimulus packages through local government which have totalled $1.2 billion since November, following last week's $220 million handout.

He said many of the projects being undertaken by councils with their grants were desperately needed projects that neither the councils or their communities had been able to afford.

But speaking from a personal point of view he issued a warning against using the money for projects that would be costly to maintain.

"While we and our communities welcome the support from the Federal Government, we need to be aware there is a real possibility of worsening what has been a pretty dire situation as far as funding is concerned," Cr Miller said.

Meanwhile, Cr Miller yesterday eased fears among some councils that he was an advocate for amalgamations.

At the association's recent annual conference he spoke on the need for a discussion about the future of local government and how councils could best deliver positive outcomes for their communities.

He said he told the conference that if local government thought there would still be 152 councils in NSW in 10 years it was kidding itself.

"My remarks were about having a discussion about where we are today and identifying the strengths and weaknesses of whatever activities we deliver on behalf of the State and Federal governments," Cr Miller said.

He said he was not advocating council amalgamations.