The New South Wales pricing regulator is recommending that ferry fares rise by about 20 per cent over the next four years and ticket prices on the Manly to Circular Quay route be deregulated.

But the State Government says any fare hike above the rate of inflation would have to be linked to improved performance.

The Independent Pricing and Regulatory Tribunal (IPART) says ferry fares need to be changed to help with the introduction of the integrated Opal card ticketing system and to recognise increasing levels of competition.

Its draft determination says that fares should be allowed to rise by 4.9 per cent each year for the next four years, so passengers begin to pay their fair share of the costs of providing ferry services.

IPART's chairman Peter Boxall says fares on the Manly to Circular Quay route should be deregulated because it is the most competitive public transport route in Sydney.

He says regulation is usually only needed in a monopoly market where a lack of competition can lead to higher prices and poor services.

The Opposition Leader John Robertson says IPART's determination is at odds with promises the Government made when it privatised Sydney ferries earlier this year.

"The O'Farrell Government promised there would be no fare increases with privatised ferry operations," he said.

"Today we see the evidence is in. Contrary to the promises of the government we see price rises of possible 5 per cent per annum with privatised ferry operations."

The Transport Minister Gladys Berejiklian says the government will not increase ferry fares by more than the rate of inflation unless services improve.

She says the proposed increases are not linked to privatisation.

"Even before we franchised Sydney Ferries I think IPART was recommending a 10 per cent increase in fares," she said.

"We've rejected IPART recommendations in the past, and we'll continue to do so unless we see demonstrated improvements for the customer."