The residents of the controversial tent city in Martin Place prepared to leave the site on Friday morning, following months of negotiations between the state government and the City of Sydney council.

After more than six months camped outside the Reserve Bank building at the eastern end of Martin Place, the homeless community started moving on about 9am, after a change in legislation that would have resulted in them being forced out.

The man dubbed the "Mayor of Martin Place", Lanz Priestly, said some camp dwellers were moving to "friend's places" or "friend's backyards".

"There are some of the people who are from here who don't have anywhere to go," he said.