Work on Sydney's second harbour rail crossing could start in two or three years if the NSW government wins the next election.
But the government has stopped short of saying how much the Sydney Rapid Transit project will cost.
Premier Mike Baird says he is confident $20 billion raised from selling off the state's electricity network poles and wires will be enough to contribute to the rail extension and other infrastructure across NSW.
"The difference between this plan and previous plans is we have announced the funding to go with it," he said of the rail project on Wednesday.
Forty nine per cent of the state's poles and wires will be sold on 99-year leases under a policy approved by Liberal and Nationals MPs following heated party room meetings on Tuesday.
The coalition will take the sale to the March 2015 election and if it wins approval, Mr Baird said he anticipates the transaction being completed by the end of 2016.
A second harbour rail crossing would be created with proceeds from the sale, extending the North West Rail Link through the CBD and on to Bankstown.
There will be new stations in the CBD, including at Pitt Street, and the government is also looking at a station at Barangaroo.
Mr Baird said the cost of the rail project was close to being finalised, with some money also drawn from government transport funds.
"We will also be inviting the private sector to participate, just as they are in the North West Rail Link," the Premier told reporters at Bankstown train station.
Transport Minister Gladys Berejiklian said before the asset sale announcement, the rail extension would not have been able to go ahead until the North West Rail Link project was finished.
"Because of yesterday's announcement and if we get a mandate at the next election I am hoping we are able to start construction on the next two to three years on this project," she said.
Meanwhile, the NSW opposition is ramping up its attacks on the state's planned power sell-off and accused Premier Mike Baird of trying to "con" the public.
"Mike Baird has simply put forward an infrastructure mirage that will come at the cost of every family across NSW through their electricity bills," opposition leader John Robertson added.
The mud slinging continued with Treasurer Andrew Constance calling Mr Robertson fiscally illiterate and accusing him of deliberately seeking to confuse debate.
He pointed to an Ernst & Young report commissioned by the NSW treasury department showing network costs had declined in states where power was privatised.
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