The New South Wales Planning Minister has approved the controversial $57 million cruise ship passenger terminal to be built at White Bay, in Sydney's inner west.

Cruise ship operators have criticised the location of the site because the largest of their ships will not be able to fit under the Harbour Bridge to dock there.

Local residents have expressed concern about the extra pressure that thousands of cruise ship passengers will place on the already congested roads in the area.

But the Planning Minister Tony Kelly says he has placed stringent noise and traffic conditions on the approval, including building a new access road to the site.