Sydney's monorail is to be knocked out to make way for a new convention centre in Darling Harbour, it has been announced.

The New South Wales Government has purchased the company that owns it, Metro Transport Sydney, and will have it torn down "as soon as feasible".

State Premier Barry O'Farrell said the news provided certainty for businesses wanting to invest in the Darling Harbour area and would allow for the development of the city's light rail network.

"The monorail is not integrated with Sydney's wider public transport network and has never been truly embraced by the community," Mr O'Farrell said.


"While it has been a controversial part of Sydney's history for more than 20 years, the monorail is reaching the end of its economic life and the NSW Government cannot justify costly upgrades like the purchase of new vehicles required to keep it running."

He said the decision paved the way for development of the Sydney International Convention, Exhibition and Entertainment Precinct.

The NSW Government purchased Metro Transport Sydney for AU$19.8 million (NZ$25.3m).

Minister for Transport Gladys Berejiklian said the simplified contractual arrangements would make it easier for the government to expand the light rail network in the future.

"The NSW Government is committed to expanding light rail and extending the Inner West Light Rail to Dulwich Hill.

"This purchase gives certainty to transport planners and will ensure light rail is fully integrated with the wider public transport network."