Irish Rural Link (IRL) said there are many areas are suffering from depopulation and they need young people to settle.
Last night, however, one city council voted in favour of the levy.
By a vote of 10 in favour and three against, the Limerick City Council adopted a €3,000 to €8,000 levy. At the top end, the charge will be applied to developments over 20 square metres.
IRL wants all local authorities to waive the development levy for first-time buyers in country areas because it will stop many young couples opting to live in the countryside. While some local authorities have chosen not to impose the levy on first-time buyers, those who want to set up home in the countryside will not benefit from this exemption.
IRL wants Environment Minister Martin Cullen to direct local authorities to change this regulation.
The City and County Managers Association, who are the umbrella group for all local authorities, could not be reached for comment. The General Council of County Councils, which represents over 700 local authority members, said it would be sympathetic to the demand for the levy to be waived for first-time buyers in rural areas.