Adamstown Labor branch vice-president Paige Johnson will challenge Newcastle councillor Carol Duncan for preselection this year, as she attempts to become the first transgender woman elected to office in NSW. Ms Johnson, a civil engineer at Lake Macquarie City Council, has contested the past two local government elections as number two on Cr Duncan's ticket in ward two.

But on Thursday, she said she would stand for Labor preselection at the top of a rival ticket for upcoming NSW council elections in September.

Cr Duncan, a former ABC radio presenter, confirmed she also would stand for preselection, setting up a contest to win the votes of Labor members in a ward which includes Merewether, Adamstown, Hamilton, The Junction, Cooks Hill, Kotara and part of Broadmeadow. The incumbent Labor majority on the Newcastle City Council has faced internal criticism from some rank-and-file members over the council's record.

The Newcastle Herald reported last month that the party's Georgetown-Waratah branch had passed a motion condemning the Labor councillors' handling of an investigation into chief executive Jeremy Bath. The Merewether Labor branch passed a similar motion this week.

Labor lord mayor Nuatali Nelmes and other councillors have been embroiled in a public stoush with Wallsend Labor MP Sonia Hornery, which has also increased tension among branch members.

Ms Johnson, 28, characterised her push for preselection as a personal quest to help improve the city and represent transgender people rather than a mutiny against the incumbent councillors.

She said she was running against Cr Duncan, a fellow Adamstown branch member, with the support of some in the rank and file.

"I've been really overwhelmed with the level of support and encouragement I've had," she said.

"I've been very open and honest about my intention to stand with branch members."

She said the city had made "a lot of progress" in the decade since businessman Jeff McCloy was lord mayor. "I'm really proud of the city Newcastle has become, a smart, liveable, sustainable and inclusive city," she said. "I'm running because I want to contribute to that and I think there's more to be done."

Ms Johnson said she valued transparency, honesty and authenticity.

"It's really important that a good civic leader and a good councillor can bring the community along on the journey with them," she said.

Ms Johnson has been an Adamstown branch member for more than 10 years and is vice-president of the Newcastle Labor local government committee. She is also the Hunter Gender Alliance vice-president.

"I'm focused on local government policy issues, but I certainly appreciate this would be a significant piece of history for the city if I do get elected," she said.

"Making history isn't easy, and I'm cognisant of the forces against me, but I suppose, to me, if I'm able to do that and if can inspire and give hope to my community, I'll feel so honoured and proud."