A rooftop restaurant planned for the State Library would see one of Sydney's most iconic cultural buildings "degraded by crass commercialisation", heritage and architecture experts have warned.

As part of plans to breathe new life into historic buildings along Macquarie Street, the state government is proposing a restaurant and function room on top of the country's oldest public library.

Artist's impression of a proposed rooftop restaurant on the State Library. Credit:State Library

It is understood the restaurant and function space could cost as much as $30 million and there are fears it will shade the iconic Mitchell library reading room, which has a glass ceiling.

Late last year, the government appointed former prime minister Paul Keating and former lord mayor Lucy Turnbull to look at how to improve the so-called Macquarie Street East precinct.