A new metro line between Sydney's Central Business District and Parramatta will be the next major public transport project initiated by the NSW government, but might come at the expense of parts of Parramatta's planned light rail network.

Senior sources have confirmed planning is underway for the metro line, intended to bring long-needed relief to Sydney's western rail corridor and service growth areas, such as the Bays Precinct around Rozelle and the former industrial lands at Camellia.

The project could also include a future expansion to a Badgerys Creek airport to the west, and is likely to also contemplate an eastward expansion to Maroubra and Long Bay.

But one option being considered is cutting back the scope of the proposed light rail line between Parramatta and Strathfield via Olympic Park, though it is understood no decision has yet been made on that idea.