The spending commitments on the infrastructure could boost Sydney's chances to be one of the three cities to host the new 24-team tournament in the lead-up to the 2020 Australian Open.
"The redevelopment of Ken Rosewall Arena and Sydney Olympic Park Tennis Centre is extremely exciting for tennis in NSW," Tennis NSW chief executive Lawrence Robertson said.
"Primarily, as it ensures the facilities here remain among the best in the country and allow us to bid for new world-class events such as the ATP Cup.
"Sydney has a long tennis history and these upgrades will go a long way to ensure we are in the best possible position to continue that tradition have the ability to host major international events in all conditions."
Launched in November last year, the new $15 million tournament has raised questions over the future of the existing events in Perth, Brisbane and Sydney that serve as warm-ups for the Australian Open.
The Hopman Cup mixed team event could be the first casualty of the shake up, despite appearances from Roger Federer and Serena Williams in its 30th edition this week at Perth.
The Brisbane event attracts strong fields every January, but the Sydney tournament, with a history dating back to 1885, has struggled for profile in recent years given its position in the week immediately before the Australian Open.
Ayres said the government would work with Tennis NSW and Tennis Australia to complete the project in time for the 2020 tennis season.
(Reporting by Hardik Vyas in Bengaluru; Editing by Greg Stutchbury)
