Sydney is the most liveable capital city in Australia, a new report has found, but is falling well short of meeting public transport expectations.

The city has the shortest distances between homes and activity centres, equal highest percentage of homes close to public open spaces like parks and the largest percentage of people using active transport such as walking or cycling to travel to work.

The report highlighted a major downside for Sydney was its public transport. Credit:Mark Merton

The findings were released on Wednesday by RMIT University's Centre for Urban Research Creating Liveable Cities in Australia report, in which it measures city policies against its implementation.

However, the report highlighted a major downside for residing in Sydney was its public transport failings. Only 2 per cent of Sydney suburbs and 38 per cent of homes met "ambitious" Transport for NSW targets for access to public transport. These include 100 per cent of residences being within 400 metres of a bus stop serviced at least every 30 minutes or within 800 metres of a train station serviced every 15 minutes.