Hundreds of public housing tenants will lose their Sydney Harbour foreshore homes after the New South Wales Government announced they will be sold to the highest bidder.

The 293 properties have been earmarked for sale in Millers Point, Gloucester Street and The Rocks, including the iconic Sirius tower near the Sydney Harbour Bridge.

The Government says the properties are too expensive to maintain and would require a significant investment to bring them up to an acceptable standard.

It is also keen to capitalise on potential high sale values.

Community Services Minister Pru Goward says some rents are subsidised by up to $40,000 a year.

"I can not look other public housing tenants in the eye when we preside over such an unfair distribution of subsidies," she said.

"Every dollar that is raised from the sale will be reinvested in social housing support."

The decision will affect 400 tenants, who have been given two years to move.

"This is a two-year process that will begin with a meeting with each household to discuss their housing needs and where they might like to go," Ms Goward said.

The Sirius public housing complex at the Rocks is one of the buildings to be sold. ( Supplied: Monica Kovacic )

"They might like to move closer to family and friends on the Central Coast."

Barry Gardner has lived in Millers Point for 65 years.

"I am gutted. I've known nowhere else in my life," he said.

"To go where? I just don't know what I'd do."

The decision has also upset the Maritime Union because many former dock workers live in the properties up for sale.

The union's Sydney branch secretary, Paul McAleer, says the residents deserve to be treated better.

"The government has no right whatsoever to sell these homes off," he said.

"It is an absolute disgrace that this government is treating these people in such a deceitful and disgraceful way."

Sydney's Lord Mayor Clover Moore is promising a fight against the state government's plans.

She says it is a shocking decision.

"What we need is a balance. We need a balance of people living in our city. We don't want our city to just be for very rich people," she said.

"I think they're going to fight very hard. I think the people down here are fighters you know and that goes back decades."