The dismantling of an encampment of homeless people in Martin Place will begin as early as Tuesday morning after the City of Sydney lord mayor, Clover Moore, announced an agreement had been successfully negotiated with the camp's organiser.

Cr Moore told a press conference on Monday that an immediate temporary 24-hour "safe space" would be established where those currently living in tents in Martin Place would be relocated.

Cr Moore said the City would contribute $100,000, and she expected the Department of Family and Community Services to also contribute $100,000 to establish a permanent 24-hour facility that provided food, showers and laundry facilities, as well as links to homelessness services.

The $100,000 funding contribution was passed at the city's council meeting on Monday night.