The University of Sydney will shut down its Sydney College of the Arts campus and transfer students to the University of NSW, under a merger agreement signed by the two universities.

Jointly announced by both universities on Tuesday, the merger follows months of speculation that the University of Sydney planned to vacate the historic Kirkbride complex in Callan Park, which has hosted the Sydney College of the Arts for the last two decades.

University of Sydney students at the College of the Arts will move to the University of NSW. Credit:Rob Homer

Many of the 550 students currently studying at the SCA will be transferred to the University of NSW Art and Design school in Paddington from the beginning of 2017 academic year, at which point all future enrolments for visual art courses will be through UNSW.

The merger has been championed by the heads of both universities as an "important step" towards the creation of national centre of artistic excellence.