Lions, elephants, giraffes and bull sharks will be among a range of native Australian and exotic animals that will make their home at a new cage-free zoo proposed in Sydney's west.

The New South Wales Government has approved the lease of an 16.5-hectare area in the Bungarribee precinct on the Great Western Highway in Blacktown for a world-class zoo.

Sydney Zoo is proposing to build a $36 million park, which will be cage-free and feature over 30 exhibits including elevated board walks and glassed observation areas.

Environment Minister Mark Speakman said the zoo, which is anticipated to open in late 2017, will be a big attraction for Sydney's growing population.

"Since Taronga Zoo was first established 100 years ago, Sydney's population has absolutely ballooned," Mr Speakman said.

"We think now there is room another world-class zoo here in western Sydney."

Sydney Zoo managing director Jake Burgess said he hoped to attract Sydney families to the zoo which will have large open spaces.

"We're going for a smaller number of large enclosures with large animals," Mr Burgess said.

"Seventy-nine per cent of our audience in the immediate vicinity is families. They have a choice, they can drive for an hour to get to Taronga or not participate."

An artist's impression of the South East Asian walk exhibit at Sydney Zoo. ( Supplied image: Sydney Zoo )

A KPMG report forecasts the zoo will contribute around $45 million a year to the NSW economy and $3 million in extra tourist spending.

Sydney Zoo is expected to create 160 jobs during construction and at least 120 jobs during operation.

"We have a focus on jobs and appropriate sustainable development in the area," Blacktown Mayor Stephen Bali said.

"It will be a cage-free zoo with limitless horizons which brings visitors safely face-to-face with animals, making it a hugely successful attraction."

Featherdale Wildlife Park doesn't see new zoo as threat

Featherdale Wildlife Park general curator Chad Staples welcomed the announcement of the new zoo just a few kilometres away.

"Featherdale is a born and bred local in western Sydney so any investment into tourism into the area we welcome with open arms," he said.

Mr Staples said he did not believe the wildlife park would lose business to the larger zoo.

"Featherdale will do more than survive," he said.

"We're an extremely successful business that the locals just love. We don't see it as having an impact because what we're doing, we do better than anyone and we have plans to do more in the future."