Advocates appearing before a public hearing on Friday also argued that government grants for service providers should be extended to five years, to give organisations greater certainty.

Domestic Violence NSW policy manager Sophie Trower said the controversial Going Home, Staying Home reforms had created "significant trauma and change and turmoil", and led to a "negative and toxic environment" among organisations that had to compete for funding.

She said government grants should last at least five years, rather than requiring organisations to reapply every one to three years. It was common for staff to find out about continuation of funding just one or two weeks before it was due to end, causing many experienced staff to seek better job security.

"You lose the specialised workforce," she said.

Ms Trower said there were still "major gaps in service provision" for women who had experienced domestic and family violence.

"In 2015, where you are located in NSW directly has an effect on how you are supported," she said. "Your postcode should not determine your safety."

A Herald investigation in July revealed 90 per cent of women's refuges in NSW were full, and only one in 58 refuges said they could accommodate a woman fleeing domestic violence on the day she sought help. The Greens used that report to call for a specific inquiry into the Going Home, Staying Home reforms. Family and Community Services Minister Brad Hazzard has previously said he is open to changing the system, following consultations.

NSW Council of Social Services chief Tracy Howe told Friday's hearing that while competition among NGOs could be a good thing, more consideration should be given to improving existing services rather than replacing them with new organisations that had produced an appealing tender.

"There has to be a middle ground," she said. "We're not buying a fleet of cars at the best price."

The state government is conducting the inquiry into service co-ordination in the state's most disadvantaged communities.

A report authored by social scientist Tony Vinson, Dropping Off the Edge 2015, found there had been little to no change among the state's worst-off areas since 1999. Nine of the 12 most disadvantaged NSW postcodes in 2015 were on the same shortlist 16 years ago, including remote areas with high Indigenous populations such as Brewarrina, Walgett and Lightning Ridge.

Professor Vinson told the inquiry one of the best ways to address disadvantage was to build social cohesion using role models, community values and peer support. He pointed to the regional Victorian city of Mildura, where community satisfaction was "almost off the board" despite an economic downturn.

"It's the most socially integrated place I've ever come across," he said.

Professor Vinson said there were some signs of hope, including promising NAPLAN results in Windale, which has long been one of the state's most disadvantaged areas. He said investment in preschool education was "the first thing" he would recommend to any impoverished community.

Parliamentarians are also investigating the possibility of greater collaboration and data sharing between government agencies and NGOs, as well as service efficiencies. Upper house government whip Peter Phelps said it was peculiar there were 192 separate services available to 2000 Indigenous people living in the City of Sydney council area.

"That seems like an awfully large number of programs," he said. "Surely there would be a fast opportunity for economies of scale."

The council's director of city life, Ann Hoban, said many of those programs operated statewide or nationally but acknowledged "there is a case for much better co-ordination and much better understanding of what everybody is doing".

The Legislative Council inquiry will hold another public hearing in November and is due to report in December.