BARRY O'FARRELL has given the clearest sign yet that he will expand Sydney's tram network, saying work should begin on a light rail project in the city or eastern suburbs before the next election.

In a wide-ranging interview to mark the start of a new year in power, the Premier defended the pace of progress since his election in March and said he aimed to deliver ''stable, mainstream, competent government''.

"I absolutely would expect there to be a start to work on light rail before the election" ... Barry O'Farrell. Credit:Wolter Peeters

The Transport Minister, Gladys Berejiklian, has said any light rail through the city would be down George Street but has always stressed that the expansion would be subject to studies still being undertaken.

Mr O'Farrell said he was ''absolutely'' attracted to the idea of light rail in the central business district. ''We understand there's … no point in having light rail to Sydney University or to UNSW unless it connects to something. And getting light rail into the CBD I think is important - and if it wasn't important before, it is certainly important I think in the context of Barangaroo.''