Its announcement has been made during National Homelessness Week.
The camp of homeless people mushroomed at the top of Sydney's famous Martin Place in December last year.
Around 70 people remain at the camp, which was last cleared by Sydney City Council workers and police in June this year.
But people have since returned to the camp, resulting in tensions between the state government and Sydney mayor, Clover Moore, who the government accuses of not doing enough to move people on.
Premier Gladys Berejiklian says the government has no choice but to introduce legislation into Parliament to end the impasse in Martin Place.
"There was nothing in the existing laws we could do that would resolve this issue amicably over and above what the City of Sydney could do. That's why today the Minister for Crown Lands will be introducing legislation to Parliament to give State Government the right over any Crown land within the City of Sydney to be able to move in and take property and also ask people to move on if it's deemed to be a public safety issue. This is a course of action I wish I didn't have to take, but it's a course of action we have have to take because the City of Sydney has not done what it had within its power to do and what it should have done."
Sydney Mayor Clover Moore has released a statement saying she wants a peaceful resolution, not a repeat of what happened in Melbourne with vulnerable homeless people being dragged away by police.
Ms Moore argues there's been decades of inaction by successive governments on homelessness, and the council has no power to move people on.
The state government has also announced it has secured an after-hours service for rough sleepers in Sydney.
The Wayside Chapel will deliver the service which will run until 11pm with a possible extension to 24 hours pending development application approval.
A spokesman for the homeless camp, Lanz Priestley, says the group will move once a suitable 24-hour facility is available.
"If they get that right all the people will go there and there will be no need for this to exist. To be clear I don't want this to exist any more than the Council do or the State Government do, but I do want it to cease to exist when the need ceases to exist."
Homeslessness Australia chairwoman Jenny Smith says rough sleepers, such as those seen on the streets in major cities, are a minority, making up around six per cent of the homeless population.
She says the number of what she calls the "hidden homeless" has increased dramatically, with a huge jump in the number of people sleeping in cars and staying short-term with friends or family.
"And we're seeing a particular increase in that group amongst older women, women over 50, with an 83 per cent increase in the last four years. We're also seeing more people presenting to our services who are sleeping in the back of cars and a 60 per cent increase in the last four years in that group. 280,000 people approached our services last year looking for assistance - that's 43,000 more people than the year before."
Ms Smith says to mark Homelessness Week, her organisation is calling on the federal government to build 100,000 new public and community housing properties in the next five years.
