Martin Place, one of the more austere places in Sydney, is set to be transformed into a vibrant dining area, with new outdoor seating and new landscaping.

For the first time, outdoor dining will be permitted between Pitt and George Streets, site of the Word War I memorial, the Cenotaph.

The proposed Martin Place upgrade will permit dining near the cenotaph for the first time, as seen in this artist's impression.

Lord Mayor Clover Moore said the council had worked closely with the RSL on the policy to expand outdoor dining to the western end of Martin Place, a move that had been urged by city landowners.

Dining is already permitted under the colonnade of the historic post office building, but tables will now be allowed in the plaza itself.