A state government plan to clean up toxic waste at Barangaroo by digging giant holes is a veiled attempt to excavate for future buildings and save money, the company assumed responsible for the contamination says.

It has also emerged that the firm, Jemena, has launched legal action over decontamination at Barangaroo South. The government agency running Barangaroo has refused to guarantee taxpayers will not foot part of the hefty bill for stripping deadly chemicals such as benzene and cyanide from the harbourfront land, despite previous assurances to the contrary.

The Barangaroo development site seen from King Street wharf Credit:Fiona Morris

The Millers Point gasworks operated at the Barangaroo site until the 1920s, leaving behind human carcinogens and substances toxic to aquatic life that are thought to be leaching into Darling Harbour.

The government has long believed legal responsibility for much of the clean-up lies with utility firm Jemena, which acquired the company that operated the gasworks.