Hundreds of new train carriages for NSW's intercity fleet will be built in South Korea after the Baird government awarded a $2.3 billion contract to a UGL-led consortium, dashing hopes that they would be assembled in Wollongong.

The first of the 512 double-deck train carriages to be rolled off the assembly line in South Korea will begin services to Newcastle, the Central Coast, Illawarra and the Blue Mountains in 2019.

The deal is the biggest train contract since the state government awarded the troubled Waratah project to a Downer EDI-led consortium almost a decade ago to build carriages in China.

Downer is one of three bidding consortiums to have lost out to UGL Rail, an Australian engineering firm which will have a 15-year contract to maintain the new carriages at Kangy Angy on the central coast.