The Timaru District Council wants funding for a viewing platform amid concerns increasing tourist numbers are getting too close to a penguin colony.
The council is proposing a custom platform off the Marine Parade near Caroline Bay Beach. It aims to offer around 100 people a better view of little blue penguins/kororā at a safe distance.
The platform will include a ramp to protect penguins from people carrying kayaks or walking dogs.
Timaru mayor Damon Odey said the separation was important so penguins could continue nesting on the rocks in the bay.
Around 12 pairs of penguins live in Caroline Bay with more along the coastline.
The council hopes to have its application ready in time for the Tourism Infrastructure Fund's August round.
Kororā, the world's smallest penguin, is native to New Zealand and is a major attraction in the region.