The future of the state Coalition government's much-vaunted agency charged with delivering urban housing projects through inner Sydney is up in the air following an internal review that recommended the agency be split in two.

UrbanGrowth NSW was created as a replacement for the government developer Landcom in 2012, in what then planning minister Brad Hazzard described as the biggest reform to the sector in almost 40 years.

"The approach of targeted government intervention in the property market is already a feature in every other state and the NSW industry has been crying out for such an organisation," Mr Hazzard said at the time.

The idea was to turn Landcom, which had primarily focused on releasing land for development on the fringes of the city, into a new agency that could help facilitate property projects across the whole city.