Regular health surveys can produce reliable estimates at higher geographic levels but not for small areas. Alternatives are to aggregate data over several years or use model-based methods. We created and evaluated model-based estimates for four health-related outcomes by gender, for 153 Local Government Areas using data from the New South Wales Population Health Survey. The evaluation examined evidence on bias and determined the covariates available and appropriate for each outcome variable. The evaluation considered the likely precision of the resulting estimates. The bias and precision of results for single years (2006-2008) for each outcome variable using six covariate specifications were compared with direct survey estimates based on a single year's data and those obtained by aggregating over seven years. A practical issue is how to choose covariates to include in the models as the best covariate specification varies between outcome variables. Model-based results had median root mean squared errors between 3.3% and 5.5% (max 5.2% and 11.3% respectively) and median relative root mean squared errors between 6.8% and 24.5% (max 11.7% and 41.5% respectively). The model-based estimates were unbiased compared with direct estimates based on one or seven years of data and when aggregated to a point where direct estimates were reliable. The bias and reliability assessment process provides a way for policymakers to have confidence in model-based estimates.