The study found people in urban areas have a lower risk of developing psychological distress and have better overall health if they have more trees within walking distance of home.

"In neighbourhoods with a tree canopy of 30 per cent or more, adults had 31 per cent lower odds of developing psychological distress, and 33 per cent lower odds of rating their general health as 'fair' or 'poor' over six years," a spokesman said.

"Urban green spaces with open grass rather than a tree canopy did not deliver the same benefits."

The study tracked the changes in health of about 46,000 people aged 45 and older in Sydney, Newcastle and Wollongong. The obvious health benefit was that trees provide shading and reduce city temperatures on hot days. More subtle benefits could be the sensory relief provided by green, leafy trees in urban areas dominated by hard surfaces, glass and concrete, and intrusive advertising.

Lead author of the report Professor Thomas Astell-Burt, a National Health and Medical Research Council Boosting Dementia Research Leadership Fellow at the university, said while other studies had indicated that green space was good for mental health, this new research looked at whether the type of green space made a difference.

"Our results suggest the type of green space does matter," Professor Astell-Burt said.

"We found that the residents of neighbourhoods with a higher amount of tree canopy had better mental and general health, but didn't find the same correlation when the type of green space was open, grassed areas."

In Canberra, a separate initiative aims to improve the lives of dementia patients by encouraging them to grow trees, which are then planted in the community.

The Greening Australia program Healthy Minds, Healthy Landscapes is managed by Jeni De Landre.

Ms De Landre said getting out and about in the environment and achieving targets is good for self-esteem.

"We found that the program gives them a little bit of improved self-esteem and also getting out and about, that physical activity is good for them," Ms De Landre said.

She said its an invaluable way to engage and support people living with dementia while giving them a meaningful way to connect with nature. It also plays a vital role in reducing depressive symptoms and re-engaging members with the community.

The 12 program participants attend the Greening Australia nursery in Aranda for two hours each week. The participants have been growing the saplings to be planted on Sunday at Goulburn, for an event as part of National Tree Day.

"The plants go far and wide," Ms De Landre said. She said they propagate, grow and maintain about 125,000 seedlings each year.

"Previous groups have been instrumental in helping us grow the tube stock that went back into the Cotter catchment after the Canberra bushfires."

She said the program allows people with dementia to get back in touch with nature in a secure and safe way.

"To see them walking about with a smile on their face about doing something like this is really priceless," she said.

Planet Ark has run National Tree Day for 35 years. The initiative is Australia's largest community tree planting event.