A new train station will be built at Barangaroo, the state government will announce in Tuesday's budget.

The idea of a Barangaroo station forming part of the planned new "metro" rail line through central Sydney had previously been listed only as a possibility under early plans for the line.

Barangaroo station plans: NSW Treasurer Gladys Berejiklian. Credit:Dominic Lorrimer

But it is understood Treasurer Gladys Berejiklian will commit the government to building the Barangaroo station, likely to cost around half a billion dollars.

Premier Mike Baird's government says it will use money raised from the privatisation of electricity assets to build a new rail line from Chatswood in the city's north to Sydenham in the inner south, between 2017 and 2024.