The Department of Defence has pledged to "work collaboratively" with Wagga council over negotiating lease terms for the city's airport.
The council has paid between $187,000 and $208,000 annually to lease Wagga's airport from Defence over the past five years under an agreement that will expire in 2025.
In September, NSW Labor Senator Deborah O'Neill wrote to Department of Defence Secretary Greg Moriarty asking for better terms for the council as it would make a "huge difference" to spend the money on the community instead.
Mr Moriarty has now responded to Senator O'Neill's letter.
"I acknowledge your concerns and would like to advise that my Department would be pleased to work collaboratively with the council in exploring a way forward that does not impede future investment by the council in the airport," Mr Moriarty stated.
"As such, Defence officials are engaging with the Council about the Council's master plan for the airport."
Senator O'Neill said she welcomed the Department of Defence's "willingness to work collaboratively with Council to find a way forward".
"I have written back to the Department encouraging them to ensure that any decisions lead to a more just financial arrangement for the council," she said.
"This means secure future investment in the Airport that doesn't merely increase the rent the Council currently pays to the Department."
Senator O'Neill said Riverina MP, Transport Minister and Deputy Prime Minister Michael McCormack should "come to the table" on the airport issue.
"Surely it's not too much to ask the Deputy Prime Minister to stand up for the community he was elected to represent," she said.
Senator O'Neill said requested a meeting with McCormack "to discuss this matter before the year is out".
In a prior response to Senator O'Neill's airport campaign, Mr McCormack he had worked hard to support aviation and the military in the region.
"The airport is not at a disadvantage under its current arrangements," Mr McCormack said last month.
Wagga City Council general manager Peter Thompson said there had been "promising" talks on the airport lease.
"As disclosed previously, council is in negotiations with the federal government, with the assistance of Member for Riverina Michael McCormack, and is working towards a new approach to Wagga airport," he said.
"Council is currently developing a master plan for the airport which will inform these negotiations.
"These discussions have been happening over the past 12 months and have been promising to date."