New South Wales Premier Gladys Berejiklian says her government will step in to close a tent city set up by homeless people in Sydney's Martin Place, accusing the city's mayor of inaction.

Lord Mayor Clover Moore on Monday night signed an agreement with the homeless people in the area that stated they would move on when a 24-hour safe space was provided.

It is understood Sydney City Council is expected to send trucks to help dismantle the camp as early as today, but those living there are yet to pack up their tents.

The Premier has accused Sydney's mayor of inaction. ( AAP: Sam Mooy )

Ms Berejiklian said the State Government would now intervene.

"Last night, I heard the mayor [Clover Moore] say that the tent city would be gone overnight. This morning that hasn't happened," she said.

"I said we'd give Council till last night and it's not happened so we'll be taking action today."

The Premier accused Cr Moore of inaction.

"The Lord Mayor… could have made it happened last week, she could have made it happen last night," she said.

Ms Berejiklian said she would release a plan later today setting out the steps that would be taken to close the tent city.

The timing of any closure was not yet known.

"I'm going to speak to my colleagues first with a plan and get their support and then I'll have something to say this afternoon," she said.

A tent city set up by homeless people is yet to be removed from Sydney's Martin place. ( ABC News: Taryn Southcombe )

At the Sydney City Council meeting, $100,000 was approved to go towards establishing that permanent safe space.

Cr Moore said she hoped the State Government would inject another $100,000.

The temporary residents will not be moving until the permanent shelter is set up, said camp spokesperson Lanz Priestly.

Sydney's Lord Mayor Clover Moore said tent city should be packed up by Tuesday morning. ( AAP )

"Our intention was to stay here and transition seamlessly to that space, and it's absurd to think that the people staying here should just have absolutely no where to go in the interim," he said.

"I'll be absolutely shocked if council trucks turn up here this morning."

The permanent safe space will be established as soon as possible, Cr Moore said, with a location yet to be confirmed.

In the meantime a temporary safe space would be set up.

There was no strict timetable for people to leave the Martin Place camp, Cr Moore said.

"When you develop an agreement like this with people living on the street who are vulnerable and fairly desperate and a State Government and city government, you act in good faith," she said.

The agreement between the people living in Tent City and Clover Moore. ( ABC News: Siobhan Fogarty )

A personal trainer known as Jackson living in one of the tents said the safe space was not a long-term solution.

"No location, no details nothing. As far as I'm concerned there is no deal," he said.

Cr Moore said the safe space would not be for sleeping and beds would not be provided, but Mr Priestly said he had been told otherwise.

"I had a discussion with her office about whether or not we could sleep in the new space, and her office agreed that that was the case," he said.

"We haven't seen the size of it... I'm sure it won't be the ideal space initially. I'm sure there'll be a lot of things that will have to be done to make it right, and it remains to be seen if that happens."