Hundreds of people shut down Sydney's Oxford Street today to protest the merger of the nation's oldest art school.

The New South Wales Government has signalled the National Art School could be absorbed into the University of New South Wales (UNSW), which students and supporters fear could be the end of the school.

Cameron Stead from the Student Representative Council at the school said it would impact the style of teaching.

"A merger with UNSW would undoubtedly see the number of teaching hours decrease in keeping with administrative costs and practices of universities," he said in a statement.

The school has turned out some of Australia's most renowned artists including Margaret Olley, John Olsen and Max Dupain.

Hundreds of people shut down Sydney's Oxford Street to protest the merger. ( ABC News: Brooke Boney )

Former student and Mambo designer Reg Mombassa said the arts community was under attack by state and federal governments.

"It's very disturbing to see it happening and I hope they can ease up," he said.

"It's not just sport and war ... art is probably way more important than those things and to not support it is criminal, and the National Art School — it's not just a Sydney-New South Wales thing, it really is a national treasure."

The move is part of suggestions by the Baird Government to change the way the three Sydney art schools are run, essentially combining some of their operations with Sydney University and the UNSW.

The move has drawn criticism from supporters of the arts who say the reason for making changes to the National Art School is part of a land grab by the Baird Government to sell off and develop the site of the school which sits on prime real estate in Sydney's Darlinghurst.

The ownership of the site recently changed from the NSW Department of Education to Government Properties NSW.

About 20 students from another Sydney arts school, University of Sydney, are occupying a building in the inner west in a separate protest.