Western Sydney residents whose smartphone data may be captured by sensors as part of a pedestrian-tracking project are being assured their information will be anonymised.

The $240,000 plan in Liverpool aims to reduce congestion by using data about movements of traffic and pedestrians to inform transport and infrastructure planning decisions.

Information will be captured by upgraded CCTV cameras and sensors that can pick up bluetooth and WiFi-enabled smartphones.

Federal Urban Infrastructure Minister Paul Fletcher said it was a good chance for other cities to see how the project, which was partially funded by federal money, is rolled out and adapt the technology.

He also assured no identifiable information would be collected.

"The name of the person, the number plate - none of that gets captured," Mr Fletcher said at the launch on Thursday.

Academics at the University of Wollongong, which also worked on the project, say the raw data is sent via the cloud and the technology could be used in countless other settings, such as hospitals.

The project is expected to be up and running by early 2019.