The New South Wales Government is predicting the state's population will exceed nine million within the next 30 years, with Sydney's population expected to grow by 40 per cent.

The new research, released today, also predicts the number of people in the state older than 65 will double in the same period, while the population of Sydney will blow-out by 1.7 million to 5.98 million.

The data shows Sydney will need an extra 636,000 houses by 2021 with the number of people per househould set to drop from 2.61 people to 2.51.

The annual number of births is forecast to rise by 18 per cent between 2006 and 2036.

People in NSW are also expected to live for longer with the average life expectancy for men set to rise from 79.1 to 85.6 years and for women 83.9 years to 89.1 by 2036.

The Planning Minister, Kristina Keneally, says current forecasts for population growth will challenge planners at all levels.

"Whilst these types of population projections are not crystal balls, they do give us a very sound basis on which to make planning decisions," she said.

"The projection that New South Wales will have 33 per cent more people in 30 years is a big challenge, not just to state government agencies, but also to local councils."

Ms Keneally says the research will help Government keep up with demand.

"The fact is we need to continue to improve Sydney's road, its rail and its health systems," she said.

"When things get fixed, we want to make sure that they stay fixed, and the data I'm releasing today will help us to do that."

She says she is confident the current metropolitan planning structures will be able to cope with the increase.