The New South Wales Government has set Boxing Day as the date trains will stop running into the Newcastle CBD via the existing heavy rail line.

Truncating the line on December 26 will see the existing railway level crossings permanently opened between Wickham and the city's east end.

The project will deliver up to 11 new pedestrian and road crossings in the rail corridor.

Transport Minister Gladys Berejiklian says closing the line at Wickham and eventually building light rail will unlock Newcastle's potential, by removing the barrier that has divided the city and the waterfront.

She says all Newcastle trains will initially terminate at Broadmeadow to allow improvements to be made at Hamilton station and frequent shuttle buses will connect passengers with the city.

The new transport interchange at Wickham which will be the new terminus for trains is due to be completed at the end of 2016.

The Minister says Boxing Day was chosen as the date for closing the rail line as it is normally a quiet time for public transport.

Ms Berejiklian says the government is meeting its commitment to progress the project, while ensuring public transport services are maintained.

"So my mission is to make sure that during the transition process I make it as easy as possible for customers to move around on public transport," she said.

"Of course we'll make sure that in the interim arrangements we have bus services that are frequent and reliable to make sure people do still have that continuous journey no matter which part of the Hunter they are coming from."

She says more details will be released in coming months about the interim bus arrangements, but there is no date yet for the introduction of light rail services.

Ms Berejiklian says she is convinced the number of people using public transport will increase as a result of cutting the line.

"I want to increase the proportion of people who catch public transport.

"I'm absolutely convinced that will occur when the light rail is up and running as well, but it's my job to make the transition as smooth as possible.

"To open up the city and work with other government agencies to really allow Newcastle and the Hunter to reach its full potential."

The Minister has also released a tender to carry out a detailed environmental assessment of the light rail project.

Opposition Leader John Robertson says the government is rushing to stop rail services ahead of the March state election, despite not having final planning approvals in place.

But, he says should Labor win the March poll, he will be aiming to bring the trains back.

"I think we have to wait and see how much work is done between Boxing Day and the next election," he said."

"The next election is certainly going to be a struggle for Labor to win, but we've made it clear that if the rail line is at a point where it can't be easily re-commenced operations, we won't be doing that.

"But if we can commence operations because no work has been done, and chances are that will be the case, then we would continue to operate the rail line."

The Hunter Business Chamber says setting a date for the rail line removal is an important milestone for the city's urban renewal.

CEO Kristen Keegan says the next step will be ensuring the new Wickham interchange will meet the city's growing transport needs.

"We're very interested in looking at the design and scope of the Wickham interchange and what that will mean for the city and what that will mean as a pivotal place for other transport services to interchange, that's going to be a very exciting project too."

A Review of Environmental Factors is due to start later this month for the Wickham Interchange, with the community getting the chance to give feedback on the design and construction.