NSW government moves to ignore heritage arguments and push ahead with demolishing Sydney's Sirius building have triggered a wider public campaign about the city's future sustainable development.

State Environment Minister Mark Speakman's July decision to reject an application for heritage listing of the 1970s public housing building, saying any heritage value "is greatly outweighed" by the revenue it could bring – estimated at up to $180 million – was a move that would make any future heritage applications harder, newly re-elected Lord Mayor Clover Moore said.

"The heritage minister is setting a dangerous precedent in the reason he's given for not listing Sirius," Ms Moore said on Tuesday. "He's undoing all the reasons heritage legislation was put in place in NSW in the first place. A whole lot of developers argue with us about heritage and we never accept the commercial argument."

"There's an incredible loss here": Lord Mayor Clover Moore says the state government is damaging planning processes and Sydney's housing mix with a plan to demolish the Sirius building. Wolter Peeters

Demolition of the building is part of a wider state government strategy to sell public housing in prime locations – such as 47 townhouses in historical Millers Point – to fund more housing elsewhere. Architects, Ms Moore and unionists will march in protest on Saturday against the planned redevelopment that will see the prime site rebuilt with new privately owned apartments.

The state government intended to lodge a Stage 1 development approval, establishing the height and scale of the new development, in the first half of next year before selling the site, a Property NSW spokesman said on Tuesday.