The Premier Mike Baird says work to cut the Newcastle rail line will proceed despite an Aboriginal land claim on the corridor.

The Awabakal Aboriginal Land Council has lodged the application over a two-kilometre stretch of the rail line, saying it is no longer being used for a public purpose.

Trains between the city and Wickham stopped on Boxing Day, despite an injunction being granted to stop the removal of the tracks.

Mr Baird said the government will not be deterred.

"A whole group of people do not want Newcastle to be revitalised," he said.

"We will revitalise Newcastle because it is in their interest.

"What is not up for grabs is the fact that this is not going to happen, because it will happen."

Mr Baird said he is confident the government will win its Supreme Court appeal so it can push ahead with the line's truncation.

"We're confident in all the processes we're undertaking," he said.

"What you're seeing at the moment is people taking a political opportunity to try to get in the way of progress.

"Well, wherever you go in history, you see similar events.

"You see people coming up against progress.

"Well we are happy to stare it down because we believe in Newcastle."

State Opposition Leader Luke Foley said the Supreme Court has already ruled that the work on the line should stop and Mr Baird should reconsider.

"I am delighted by the Christmas Eve court decision that made clear that the Coalition government's signature policy for the second city in this state is predicated on an illegal act," he said.

Mr Foley said the best use of the land is as a rail corridor.

"I don't want Newcastle to be the only city anywhere in the first world to be ripping up rail infrastructure," he said.

"And the plan we will take to the people in March is based on, not only keeping the rail corridor, but improving the connections across the rail corridor."

Mr Foley has rejected claims that keeping the rail line will restrict growth in the city.

He said it is nonsense that growth in the city will grind to a halt if the rail corridor stays.

"Mike Baird and the Liberals like to pretend that the renewal of Newcastle is some new concept," he said.

"The truth is, the renewal of Newcastle has been going on since the earthquake and since the closure of BHP.

"The labor market, the employment base here, the industry base has diversified - I am determined to accelerate that process."