Under the new measures, large venues along a portion of Oxford Street will not be able to admit patrons past 1.30am or serve alcohol past 3am.
Sydney man Sean Klein* said the area provided a safe environment for people in the LGBT community to meet, and said they would be "alienated" under the proposed changes.
"These clubs offer an environment for young and old gay people to come and meet – many are people who come in from remote or rural areas," he said.
Mr Klein said Oxford Street was the epicentre of the gay night scene and it was unlikely this would be replaced by venues outside of the proposed precinct.
"There are a lot of bars in Darling Harbour and the city that are incredibly homophobic and I would never dare to kiss my partner in one of those places,” he said. “I think it would require a very courageous group of gay people to start testing the waters."
Craig Bell, co-owner of the Stonewall Hotel on Oxford Street – described as "a safe place for the GLBTI community" on its website – said the problem was a lack of options.
"The gay community will be unfairly effected on the basis that they don't have the amount of choice of gay venues outside the effected area as the rest of the community does," he said.
But Vice President of the Sydney Gay and Lesbian Business Association Mark Haines said while the changes would impact businesses on Oxford Street, his main concern was around personal safety.
"My main concern is how people are going to get home. If they’re going to close the venues early and create a situation where more people are on the street, the government has to make provisions to get people home," he said.
Gay Sydney man Jon Corke, who was last year the victim of a violent homophobic attack in Berlin, shared those concerns.
"I think the lockout will pose a lot of problems because there will be a lot of people out on the street, without any way of getting home," he said.
"There could be a lot more violence on Oxford Street toward gay people."
With the annual Mardi Gras festival set to start on February 7, Sean Klein said the changes would cast a shadow on the event.
"Mardi Gras is an international event and people do come to Sydney from all across the world and there are a lot of parties that happen afterwards in the gay clubs along Oxford Street," he said.
"I think it's going to be an embarrassment for Sydney because Sydney is supposed to be a 'world city' and these kind of restrictions aren’t present in any big city I've been to."
*Name has been changed.
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