New South Wales Premier Mike Baird has dismissed concerns that the inner-Sydney suburb of Waterloo will end up with residential density similar to levels in Hong Kong and New York.

The City of Sydney Council is concerned the State Government will create a density of more than 70,000 people per square kilometre when it redevelops the Waterloo Social Housing Estate.

But the Premier said those figures were wrong.

Clover Moore is concerned about increased density in an inner city suburb. ( AAP: Marianna Massey )

"The density would be similar to the nearby Green Square development which is more than 22,000 people per square kilometre," Mr Baird said.

"Public space, parks, schools, health facilities - all of those are part of the consideration when undertaking additional population but you've got to have the transportation to come and obviously the Waterloo stop on the metro provides a huge opportunity.

"Yes, to provide more density, but nothing more, nothing less than right along side Green Square and the density we're seeing there."

Redevelopment to be 'unanimously opposed': Council

The State Government is planning to transform the rail corridor between Eveleigh and Central, including the housing estate, which is near a planned new railway station, into a private, affordable and social housing area with retail and office space.

The council said the result would be a suburb four times higher than currently found in Pyrmont — Sydney's most dense area.

The density levels in the area would be similar to those in Hong Kong.

Sydney Lord Mayor Clover Moore said the development was unanimously opposed.

"It is simply unimaginable and that is why we are so alarmed," Ms Moore said.

"We are totally against it."

Project 'a blight on Sydney forever': Opposition

Opposition Planning spokesman Michael Daley shares the council's concerns.

"This could put a blight on Sydney forever and produce serious social problems," he said.

Housing blocks in the Kwun Tong district of Hong Kong. ( Reuters: Bobby Yip )

City of Sydney Council CEO Monica Barone outlined the council's "significant concern" in a report tabled at a meeting on Monday night.

"When it is complete, Green Square [in Sydney's inner east] at 22,000 people per square kilometre will become the densest area in Australia," the report said.

"What UrbanGrowth are proposing is 70,000 people per square kilometre."

The report said such dense development was unprecedented in Australia and rare internationally, with no similar examples in London and "only a few" in New York and Paris.

"Neighbourhoods of this density are found in parts of Hong Kong, but not in Singapore."

Density will 'quickly trail off at the edges': program director

Troy Daly, program director for the Central to Eveleigh development at UrbanGrowth, the NSW Government development agency, said the numbers the council was citing were wrong.

"We actually believe from the analysis we had commissioned that will be about the same as the Green Square town centre in the densest part and then about the same as Green Square over the wide kilometre area," Mr Daly said.

"So, we do dispute the numbers and the way they've been based.

"That density will not be the same over the full square kilometre, it'll tail off quite quickly from the edges."

Mr Daly said his team had been in consultation with the community for 18 months to work out the necessary facilities for the final redevelopment.

"This is going to be one of the best-serviced public transport areas in Sydney, it's one of the closest areas to jobs — that's the commute into the CBD, to universities and hospitals."