The New South Wales Government has been hit with another lawsuit over its troubled delivery of the Sydney Light Rail project, with a second contractor suing for millions of dollars over a contract dispute.

Queensland-based contractor VAC Group is seeking at least $4 million, plus damages, over the project.

It filed documents in the Federal Court in April, claiming: "Transport has engaged in conduct which is misleading and/or deceptive, or likely to mislead or deceive."

It means that the Government is simultaneously fighting two court cases over the Light Rail, as it tries to have Spanish contractor Acciona's demand for $1.2 billion struck out.

VAC Group was engaged to do trenching work underneath George Street in the CBD as part of the early preparation works for the light rail project.

Premier Gladys Berejiklian acknowledged today it had been engaged in a contract dispute for more than a year.

Underground tracks a surprise

Court documents lodged by the company and obtained by the State Opposition, claim that the Government did not warn the contractor about the presence of underground tram tracks, and that it was not granted enough hours of access to sites to get the work done.

Opposition Leader Luke Foley said the Government could no longer deny it bungled the project.

"This is becoming the most disastrous infrastructure program delivered in NSW history," Mr Foley said.

"You now have a queue of companies at the door of the highest courts in the state, lined up in legal battles with the Berejiklian Government."

VAC Group's court case bears similarities to the arguments made by Acciona — claims it was misled about the true cost and extent of work required to replace underground power cables before it signed the light rail contract.

The Government has now lodged papers to try to strike out Acciona's claim.

The case is due to return to court on Friday.

A fortnight ago, it also emerged that a contractor engaged to build the M5 tunnels as part of the second stage of WestConnex was also seeking up to $700 million from the Government.

The Minister for WestConnex, Stuart Ayres, said that he still hoped that dispute could be resolved.