Plans to transform a dilapidated power station into Sydney's answer to Silicon Valley have hit a major stumbling block, after tech-giant Google walked away from negotiations to redevelop the site.

In 2015 former NSW premier Mike Baird announced that the Government wanted the White Bay power station at Rozelle to be turned into an international technology hub, one of the centrepieces of the revitalisation of the Bays Precinct area.

The Government entered direct talks with Google to move its Australian headquarters to White Bay, one of 13 companies that submitted proposals for the project.

But now the tech giant has said it made the decision to discontinue the negotiations.

"We've come to realise that achieving that vision isn't possible within our timeframe," a spokesman for Google said.

Lack of public transport an issue for Google

The State Government acknowledged that the timing of transport infrastructure for the area was an issue for Google.

The head of projects at Urban Growth NSW, Barry Mann, said since the vision for White Bay was unveiled, the Government had announced a number of new projects that would be under construction when the company wanted to move in.

"The State Government's [since] announced a Sydney Metro West [railway], which will highly likely have a stop at the bays," he said.

"The West Harbour Tunnel and the beaches link and WestConnex Stage 3 will be coming out on the Anzac Bridge as well.

"What it means is in Google's initial years of occupancy of the power station they'd be in a major construction zone."

More like a 'Chatswood by the Sea' than Silicon Valley: Opposition

.Artist impression of the Glebe Island White Bay Power Station and foreshore redevelopment. ( Supplied: NSW Government )

Mr Mann downplayed the impact of Google's decision on the Government's wider plans to revitalise the Bays Precinct.

"I don't think it's a massive drama, it's a really long-term project, it's going to take 20 to 30 years across the entire Bays Precinct... and we're only three years in," Mr Mann said.

But Opposition Leader Luke Foley believes the Government will struggle to attract the kind of international companies it wants to move in to the Bays Precinct, unless it radically revamps its plans for the area.

"It's all fallen apart because the Government has only had a plan for the area for more and more high-rise apartments," Mr Foley said.

"You won't get companies like Google and their talented mobile workforce to relocate to a precinct unless that precinct has public transport, accessibility and open space.

"They haven't done anything to bring their bold promise to fruition. The Government's policy for White Bay and the Bays precinct is to build Chatswood by the Sea."

Mr Foley said without an anchor tenant like Google, the Government will struggle to attract other high-tech companies.

The Government said it remained committed to having a technology hub at White Bay.

Google said it would continue its hunt for a new Australian headquarters elsewhere in Sydney.