Premier Mike Baird says he makes no apologies for relocating one of Sydney's biggest cultural institutions to the city's west despite community opposition.
The NSW government on Monday confirmed it plans to build the new Powerhouse Museum in the former David Jones car park on the banks of the Parramatta River.
The move comes after 10,000 people, including actress Cate Blanchett and former premier Bob Carr, signed a petition calling on the government to scrap the plan to move the museum from inner-city Ultimo.
Mr Baird defended the relocation, arguing that previous state governments had neglected western Sydney.
"It's about time that western Sydney had one of the great cultural institutions right here in its heart," he told reporters at the proposed site.
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Mr Baird said he was confident international tourists would be willing to make the journey out west.
"I think it will become second nature. Everyone will want to come to this museum (and) they will visit Parramatta as part of it, which is great for the local economy," he said.
Plans for the Ultimo site still need to be determined but it's expected the government will sell the valuable inner-city land, which originally housed a power station dedicated to Sydney's electric trams.
NSW Labor leader Luke Foley urged the government not to sell the site to property developers.
"My challenge to the government is, if you're shifting the Powerhouse keep the land you own in Ultimo and deliver a new school to the people of the inner city," he said on Monday.
Mr Baird would not guarantee whether the land would be sold to developers but said he expected it to be a "multi-use" site in the future.
"It's not just an opportunity to make a dollar, it's an opportunity to create something great there and that's generally the intent of government," Mr Baird said.
The new museum - which is expected to be renamed - will showcase 40 per cent more of the Powerhouse's exhibits.
Construction is due to start in 2018 and finish in 2022, creating an estimated 3000 jobs.
