Sydney's Powerhouse Museum will be moved to Parramatta, in the city's west, if the Coalition Government is re-elected next month.

The proposal is part of a wider plan to inject $30 million over the next four years to develop an art and culture precinct in the west.

New South Wales Premier Mike Baird said the existing museum building at Ultimo would be sold to developers.

"That [site] will be used for urban renewal," he said.

"That will be sold as part of this and every single dollar of that will go towards this new museum.

"That's the opportunity we have, we have a chance to turn an old museum and site into a brand new museum that is going to be the envy of this country."

The Premier said a design competition would be held to work out the final look and layout of the new museum.

He said an exact site in Parramatta had not been decided on.

Mr Baird also pledged $800,000 to attract a resident company to Parramatta's Riverside Theatre as part of the plan as well as $7.5 million to support western Sydney artists and organisations.

Deputy Premier and Arts Minister Troy Grant said western Sydney deserved its own cultural institution.

"Audiences in western Sydney are the big winners out of today's announcement," he said in a statement.

"Practicing and emerging artists will also benefit by creating and offering content designed specifically for the local community."

New South Wales goes to the polls on March 28.