The Education Department is talking with Treasury about funding an updated relocation allowance for new Katherine teachers.

And if teachers follow through with their threats to leave Katherine schools the government has given them "information on alternative options that they may wish to consider to remain teaching in the Territory".

The rental subsidy issue is still set to the finalised in the next month, a deadline has been set for the end of this term.

The NT Government controversially wants to remove $500,000 from its Katherine teacher rental subsidy scheme to help rescue its ailing Budget.

While the department says negotiations are continuing with Katherine education staff, it has been warned teachers remain upset and an unknown number are threatening to leave.

Under the current discussions, subsidies may mostly stay for existing teachers but may be phased out for new staff.

"The short term solution is looking better," AEU NT Branch president Jarvis Ryan said.

"But it could create a much bigger problem in the long term ... without those incentives will that supply of teachers for Katherine dry up."

Housing subsidies have long been used as one method to attract teachers to remote areas like Katherine which the teachers union says has the highest turnover of teachers in the NT.

Katherine Times has been told the department is now seeking to have cuts, or changes as they are now being called, spread wider than first intend so the pain is shared more widely.

Mr Ryan estimates that rents will rise a more reasonable $20-$45 a week for those who already have them under the latest negotiations.

Of about 300 education staff in Katherine, the department "was looking at" 94 education staff, including principals, who receive the subsidy, or about a third.

The department's chief executive Vicki Baylis traveled for the third time to Katherine earlier in the month for another "engagement session" on the mooted changes.

"Following feedback provided by employees over the past four months, a refined model for implementation from 2020 was presented," a department spokesman said.

"The model includes a set fortnightly rental cap and proposed staff contributions both of which are determined by an employee's remuneration package.

"This model provides greater equity to the current model in terms of lower paid teachers contributing a smaller percentage to the highest paid teachers. This is in comparison to the current model, where the contribution is the same irrespective of an employees' pay rate."

The spokesman said the Department of Education was working with Treasury and Office of the Commissioner for Public Employment plus consulting with the teachers' union and other unnamed stakeholders over the vexing issue.

The department wants to "develop guidelines that will provide clarity for staff and to ensure that we are adhering to employee agreements and any other legislative requirements".

The spokesman said the department remained committed to attracting and retaining quality teachers for children in Katherine.

"Planning with principals around attraction and retention options has commenced," the spokesman said.

"This includes a recruitment campaign and looking at a relocation allowance entitlement for Katherine employees, which the Department of Education is currently discussing with OCPE and Treasury.

"The department recognises the importance of keeping high quality teachers in Katherine and throughout the NT.

"Employees who currently receive the housing subsidy and are not satisfied with the model, have been provided with information on alternative options that they may wish to consider to remain teaching in the Territory."

The Katherine Times questioned the department further on the suggested relocation allowance for new teachers.

"A relocation allowance is assistance a new employee may be entitled to if they need to relocate to the Territory to take up a teaching positing in a government school," the spokesman said.

"The way this looks for Katherine teachers is currently being discussed with OCPE and Treasury."

The Australian Education Union NT has warned the cost of recruiting more teachers for Katherine would be far greater than the $500,000 the government hoped to save.

Mr Ryan said the department had suggested some welcome changes to the original cuts.

He said the department had made "a genuine commitment to listen".

"I want to go down there next week and see if our members agree, that it is sounding much better.

"The future is the real worry, I think."

Katherine still does not have the services, or the amenities of places like Darwin and Alice Springs, he said.

"That's why the rental subsidy scheme started in the first place, to attract teachers there.

"If we don't have it, then what is going to happen?"

The current school term ends on September 27.

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