Local councillors in Randwick are "shocked" a historic Moreton Bay fig tree known as the 'Tree of Knowledge' was partially cut down overnight, despite what they say were ongoing negotiations to save it.

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About 40 people gathered at the corner of Wansey Road and High Street in Randwick as arborists started cutting down the tree to make way for Sydney's south-east light rail line.

A number of trees along Anzac Parade at Sydney's Moore Park have already been removed for the project.

Randwick councillor Murray Matson said he understood negotiations for an alternative plan that spared the tree had been ongoing.

"It has come as a deplorable shock to me personally as an elected representative to learn tonight from residents and constituents that the tree is being removed," he said.

"I think this is a very poor way to treat a council that was genuinely trying to meet the Government halfway."

Residents were not notified, activist says

Councillor Kathy Neilson, who also sits on Randwick Council, said it was a huge loss to the local community and impacted on native animals.

"We're living through a pretty horrendous time with our wildlife," she said.

"To lose another [tree] of such size and significance is just tragic."

Margaret Hogg from Saving Sydney's Trees said the State Government did not inform residents or conservation groups the fig would be cut down.

"It's so appalling to the community, who actually thought they had the approval of their council and everything was going above board," she said.

"I personally have an email from Sydney light rail saying I would be notified."

No feasible alternative: spokeswoman

A Transport for NSW spokeswoman said "unfortunately, building a major transport project in an urban area requires some unavoidable tree removal".

The historical fig tree, near University NSW, after it was pruned this morning. ( Supplied: Mehreen Faruqi, Twitter )

"This tree has been approved and publicly identified as needing to be removed since the Environmental Impact Statement was released in 2013," the spokeswoman said.

"We sought alternate designs that would reduce the impact on this large tree at the corner of Wansey Road and High Street, but it was found not to be feasible."

She said to avoid removing the tree it would have been necessary to remove a lane of traffic from Wansey Road and for an apartment building to be demolished on the corner of High Street.

The spokeswoman said Transport for NSW and Randwick council met last month to consider alternate designs but "none were feasible" and the council was notified as such after the meeting.

"No undertaking was given at any time that this tree would not be removed before November."

She said Transport for NSW and ALTRAC Light Rail, who are building the line, have continued to "work tree by tree looking to save, prune or relocate a tree rather than remove it and have managed to save more than 120 trees to date".