A tram has broken down during testing on George Street, causing two major intersections in the middle of Sydney's CBD to be blocked.

The 67-metre tram stopped along a stretch of George Street, crossing the intersection of Market Street, about 12.50pm on Wednesday.

Police directed cars and pedestrians around the tram for about 40 minutes before it was moved.

A spokeswoman for Transport for NSW said the breakdown was due to a power failure that caused all trams testing on the CBD and South East Light Rail to stop.