NSW Labor leader Michael Daley has been captured on video claiming that young people were leaving Sydney and being replaced by foreigners who were "moving in and taking their jobs".

In the video, Mr Daley can be seen telling an audience at a pub in the Blue Mountains that a "transformation" was under way in Sydney and young workers were being replaced by Asian immigrants.

"Our young children will flee and who are they being replaced with? They are being replaced by young people from typically Asia with PhDs," Mr Daley can be heard saying in a video.

"There's a transformation happening in Sydney now where our kids are moving out and foreigners are moving in and taking their jobs.