ANZ Stadium at Sydney Olympic Park, which held the 2000 Games, will be substantially demolished and rebuilt from 2019 after Allianz Stadium at Moore Park is rebuilt in 2018.
The NSW government hopes the works will make ANZ Stadium the premier rectangular ground in Australia.
AAP understands the new 75,000-seat stadium could have a retractable roof, with construction works to take at least 2.5 years.
The plan, to be officially announced on Friday, is larger in scope and significantly more costly than the vision put forward by former premier Mike Baird in 2016, which would have seen the two stadiums refurbished only.
A $300 million redevelopment of Parramatta Stadium due to be completed by 2019, combined with the government’s $200 million purchase of the Olympic stadium, brings the total cost to $2.5 billion, according to NSW Labor.
Opposition leader Luke Foley acknowledges ANZ needs to be upgraded but opposes the additional funding for Allianz which he’s described as a “white elephant”.
“I can’t and won’t support $2.5 billion on a couple of sporting stadiums when there are 100,000 school kids being taught in demountable classrooms,” Mr Foley told reporters on Thursday.
“When you add it all up, it’s $2.5 billion while we have record waiting lists for elective surgery and at emergency departments in western Sydney.”