Sydney lord mayor Clover Moore has warned the Berejiklian government's proposed higher-density overhaul of the Waterloo social housing estate is a "planning disaster" set to create "ghettos of the future" in the city's inner south.

The government's three design options for the massive redevelopment, released last week, included towers up to 40 storeys and as many as 7200 homes, more than triple the 2000 current residences.

An artist's impression for one of the options of the redevelopment, the Waterloo Village Green. Credit:NSW government

Cr Moore said plans for the project would turn the area around the Waterloo metro station into "one of the highest density precincts in Australia".

She said the revamp had been proposed "despite the fact that it is already surrounded by other huge development sites, with no detail about how the area will cope".