The New South Wales Government will buy 27 properties along Victoria Road in Sydney's inner west to build the new WestConnex interchange and a tunnel connecting the motorway to the Iron Cove Bridge.

Premier Mike Baird has unveiled plans for the interchange, which will be built mostly underground beneath the disused former Rozelle Rail Yards.

The rail yards would be transformed into 10 hectares of new parklands.

Roads Minister Duncan Gay and NSW Premier Mike Baird at a WestConnex announcement. ( ABC News: Sarah Gerathy )

The new tunnel connection to the Iron Cove Bridge will run underneath Victoria Road, meaning motorists can use it to travel directly to or from the WestConnex motorway or Anzac Bridge.

To build it, Mr Baird said 27 homes would be acquired along a section of Victoria Road, to allow it to be widened.

"That's never easy, I want to be clear on that ... for those who lose their homes it's a very difficult thing," Mr Baird said.

The Sydney Motorway Corporation said it already contacted or attempted to contact all residents whose homes would be targeted.

The WestConnex project is a controversial 33-kilometre motorway project, currently under construction, which has been described as the "missing link" in Sydney's road network.

New tunnel connection 'won't cost a cent more'

An illustration how the WestConnex interchange at Rozelle is set to look once it is completed. ( Supplied: NSW Government )

NSW Roads Minister Duncan Gay said the tunnel would reduce traffic volumes along Victoria Road through Rozelle by half and it would be built within the existing budget for WestConnex.

"The new tunnel connection is a wonderful addition ... which won't cost a cent more," Mr Gay said.

He said the plan was far from the ugly, above-ground, "spaghetti-style" junction that many feared.

"What we are announcing is a much better solution than we originally thought we'd be able to provide and certainly hugely better than the opponents of WestConnex and the Opposition have been telling the community would happen."

He said the new plan allowed property acquisitions to be minimised.

"We expect some people won't be happy but I suspect there's a lot of people who will tonight be saying 'phew'."

Project being 'scrambled together with little thought'

But the State Opposition said the Government's decision to build another tunnel extension to the WestConnex would likely result in the project's budget ballooning again.

Opposition Transport spokeswoman Jodi McKay said it would be a miracle if the plan was to go ahead for no extra cost.

"What we have is a project that is being put together, scrambled together with little thought," Ms McKay said.

"I think it's concerning that this project is now $17 billion it started out as $10 billion.

"There were three sections to this project and now it keeps growing and growing and growing."