Renowned British musician Brian Eno will curate a three-week music festival at the Sydney Opera House, while the city is illuminated by light installations as part of the new Vivid Sydney event.

The New South Wales Government says the festival of music, lights and ideas will be the biggest event of its kind in the Southern Hemisphere.

The festival will run from May 26 to June 14 and will feature four major events, including the Luminous music festival at the Opera House curated by Eno - best known for his work with Roxy Music, David Bowie, U2, Talking Heads and Coldplay.

The Opera House sails will be lit up by a changing display designed by Eno throughout the music festival, which will include performances by New York band Battles, UK electropop outfit Ladytron, Irish singer-songwriter Damien Dempsey and comedian and musician Reggie Watts.

The second event - Smart Light Sydney - will feature light installations created by Australian and international artists and placed from Sydney Observatory, through the Rocks to Circular Quay.

A three-night food and music festival will be held at The Rocks, where the focus will be a recreation of the tragic 1814 sinking of the convict ship The Three Bees under the Sydney Harbour Bridge.

Creative industry seminars, workshops and performances will also be held throughout Vivid Sydney under the banner of the fourth event, Creative Sydney.

Eno will be in residence at the Opera House throughout the festival and will participate in talks and performances with artists and other guests.

Luminous will also feature Eno's audio-visual installation - 77 Million Paintings - created for the Venice Biennale.

In a statement, he says the artists and musicians slated for the festival are only alike in the sense that they cannot be categorised.

"They are people who work in the new territories, the places in between, the places out at the edges," he said.

"Some of them take old forms and infuse them with new life and make them new again, and others have invented forms of art that didn't previously exist."

Light extragavanza

Events NSW chief Geoff Parmenter says Vivid Sydney will generate $10 million worth of economic activity in its first year. He says the figure is expected to grow in subsequent years.

Mr Parmenter says Smart Light Sydney will be the biggest light festival in the Southern Hemisphere.

"It's actually a sustainable light festival using a special technology that uses tiny amounts of power, a bit like Sculptures By The Sea but along the harbour foreshore and featuring a bunch of Sydney's landmark buildings," he said.

The three-day Fire Water festival will be held in the Rocks from June 12 to 14, featuring fire sculptures, light installations, music, food stalls and the recreation of the Three Bees tragedy.

Organisers say a sculpture of the ship will emerge from the water below the Harbour Bridge on each of the three evenings, before it catches fire and sinks.

Visitors will be invited to create floating lanterns and put them in the bay to symbolise the descendants of the 210 Irish convicts who died on the ship when it caught alight with 30 kegs of gunpowder and loaded cannons on board at Sydney Cove.

Mr Parmenter says Vivid Sydney will compliment the already popular and well established Sydney Festival.

"We felt that there's a recognised gap in the calendar at this time of year and an opportunity to create something that we expect in a short space of time can become a very substantial signature event for Sydney, showcasing Sydney's fantastic creative credentials," he said.

Eno became prominent in the early 1970s as a member of Roxy Music.

He has collaborated with and produced albums for U2, David Bowie, Devo, Coldplay, John Cale, Talking Heads and David Byrne.

As a solo artist, he is considered a pioneer of modern ambient music.