ALMOST 25 years after its reopening for the bicentennial, Darling Harbour will be dug up again to make way for Australia's largest convention and exhibition space as part of a billion-dollar facelift.

The overhaul will be bookended by a 900-room hotel on the northern end of the precinct, plus shops, offices and hundreds of apartments in a new urban neighbourhood dubbed ''The Haymarket'' to its south.

Under two separate agreements for these areas, covering more than a quarter of the 20-hectare site, Lend Lease will pay the government an undisclosed sum - with a final expected value of $1.5 billion.

Infrastructure NSW, which is running the entire process, will enter into detailed negotiations with the preferred bidder for the public facilities, the Destination Sydney consortium - comprising Lend Lease, AEG Ogden, Capella Capital and Spotless.