The NSW Labor government led by former premier Morris Iemma announced it would build Sydney's $1 billion desalination plant without consideration by the cabinet budget committee and on the basis of a focus group, a former minister claims.

Carl Scully, whose ambition to become premier was thwarted when powerbrokers including Eddie Obeid and Joe Tripodi switched their support to Mr Iemma following Bob Carr's retirement in 2005, makes the claim in his memoir, Setting the Record Straight.

But it has been firmly rejected as "ridiculous" and "not correct" by Mr Iemma and Mark Arbib, the former NSW ALP general secretary alleged to have run the focus group.

Mr Iemma told Fairfax Media: "Carl should just look into the mirror and he will find the one and only reason he never became premier. I feel very sorry for Carl Scully".