The city's medical leader, Gerard Carroll, said Wagga Wagga's ''decrepit'' hospital had been ranked at the top of the priority list for rebuilding, until funding dried up last year.

But this week the hospitals at Tamworth and Port Macquarie won preferential treatment under the deals the Prime Minister, Julia Gillard, struck with the independents Tony Windsor and Rob Oakeshott.

Ms Gillard wrote to Mr Windsor declaring that a minority Labor government agreed to the redevelopment of Tamworth Hospital and would contribute up to $20 million for a teaching and training facility there.

She told Mr Oakeshott that Labor would finance the $75 million extension of Port Macquarie Base Hospital, subject to approval by the Health and Hospital Fund.

Professor Carroll said that Wagga's medical leaders had been informed by NSW Health that Wagga Base and Penrith's Nepean Hospital were classified as the most deserving of redevelopment funding.

The state Health Department had been prepared at the time to propose the Wagga hospital for redevelopment under the Rudd government's new Health and Hospital Fund.

The funding plan fell through, apparently because the money dried up, Professor Carroll said. Wagga has been pressing for decades for the redevelopment of the 50-year-old building and before the last state election was promised a $300 million hospital by the then premier, Morris Iemma. It never eventuated.

Professor Carroll, a cardiologist, said the problem was that the Riverina town sat in a ''very conservative seat'' which Labor could ignore.

''We would hope that with common sense and this new focus on regional infrastructure and health … Wagga hospital is given the highest priority,'' he said.

Jenny May, who chairs the National Rural Health Alliance, said giving preferential treatment to regional areas provided ''long overdue'' equity to people in those areas.

Dr May, a GP from Tamworth, said she was sure Wagga and Tamworth were justified cases for redevelopment.

The Health Minister, Nicola Roxon, said a new round of applications for the $1.8 billion left in the Health and Hospital Fund would open next month.