The artist behind Oxford Street's striking pink and blue T2 building at Taylor Square said he was disappointed the well-known facade will soon disappear from the streetscape.

The Always Was Always Will Be artwork sits right on Taylor Square in Darlinghurst. ( Supplied: Reko Rennie )

Reko Rennie said he had decided to paint over his artwork, which covers the whole building, after learning the City of Sydney was putting the prominent building up for sale.

"There's no way I want my artwork to be associated with a gaming venue or any licensed establishment," he said.

"So unfortunately the City of Sydney gave me no other choice but to have the work removed because it couldn't guarantee the future of it.

"I'd rather have the work taken down rather than glorifying some misappropriated venue."

The artwork covering the entire facade of the council-owned building is entitled Always Was, Always Will Be and was commissioned by the City of Sydney in 2012.

Artist Reko Rennie in his studio in the Melbourne suburb of Fitzroy. ( Supplied: Sean Fennessy/Reko Rennie )

Rennie, a Kamilaroi man, wanted the painting to pay tribute and acknowledge the original Aboriginal custodians of the land.

Peter Lonergan from Cracknell and Lonergan Architects worked with Rennie on the art project and said he would be sad to see it go, although he recognised it was a "reasonable commercial decision" by the council.

"I think it'll be a great loss for the city … for a work that's become iconic in the years it's been there but I totally understand the reasons why Reko wants the artwork removed."

Mr Lonergan said while the colour palette stirred up controversy among residents when it was proposed, the building has now become something of an icon on the corner of Oxford and Flinders streets.

"It seemed to certainly resonate with the gay community who almost took it on as their headquarters."

An online petition has been calling for the building to be retained by the council and used as a LGBTI community museum.

"If this sale goes ahead, we'll just end up with another convenience store, empty shopfront or apartment block on Oxford St — and our history still won't have a permanent home," the petition said.

The ABC understands the artwork will be painted over next week.

The council declined to be interviewed, but in a written statement said while the artwork would be removed it would live on the council's website.

The webpage for the artwork already states the artwork is "no longer at this location".