Jaded with big city life - especially in Sydney - Australians will increasingly head for smaller regional centres that will need huge spending to cope with the flow, the federal Government has been told.

A report commissioned by the Immigration Department to study the policy implications of continued migration says planners also need to rethink the future of major cities, including lifting population densities and developing new transport systems.

The report, by Adelaide University researchers Professor Graeme Hugo and Dr Kevin Harris, urges a new look at decentralisation despite the failure of past policies to more evenly spread the nation's population.

"The Australian economy is structurally different than in the past and revolutions in transport and communications reduce many imperatives for capital city living," it says.

The report follows a series of recent moves to encourage people to move into large regional centres to ease the increasing pressure on continually expanding cities.

For the past decade the biggest population increases have centred on the city fringes and redevelopment in their centres, with other significant moves to the coast and to smaller cities and towns inland.

The move to the bush is being encouraged in New South Wales and Western Australia, where regional centres, supported by state governments, have banded together to lure people out of Sydney and Perth.

Research by the NSW Evocities project showed one in four Sydneysiders is considering a move to the seven centres involved in the campaign.

In WA, Geraldton, north of Perth, has joined the southern coastal centres of Bunbury and Albany, and Kalgoorlie in the Goldfields, to form the Regional Cities Alliance, with a similar aim.

And last year Victoria's former Labor government launched a plan to encourage Melbournites to move to Geelong, Bendigo, Ballarat or the Latrobe Valley.

The new report, focusing on population changes between 2001 and 2006 in the nation's 60 statistical divisions, showed growing dissatisfaction with all capital cities except Brisbane.

Sydney suffered most, with "huge" net internal migration loss. Melbourne's loss was only a fifth of the New South Wales capital's.

"Does Sydney's environment - be it economic or social - have a negative impact in terms of both attracting and keeping people?" the report asks.

"Sydney consistently experienced substantial net migration losses. The magnitude of the losses was matched by no other capital city."

Changes are becoming apparent.

Australia's population had been heavily concentrated in the state capitals in a trend that increased steadily until 1981, but their share of the nation's population has since stagnated.

Sydney, and to a lesser extent Melbourne, have now become important sources of migrants for other parts of the nation.

The report says many Australians, especially the young, avoid the big cities and instead move from region to region, while others head overseas to pursue careers.

"The recent evidence is clear that the perception of a drift to capital cities from their hinterlands is no longer the case and that the prevailing flow from capital cities has significant implications."

With Australia's population expected to continue increasing significantly, the report says planners should consider whether infrastructure should be provided to boost growth in regional centres with the economic potential to absorb and support a larger population.

"The key to shifting the balance of growth from the cities to the regions is infrastructure," the report says.

Planners would also need to consider such other factors as housing availability and affordability, but the potential for regional expansion was increasing through revolutions in transport and communications, and a growing yearning for a more relaxed lifestyle.

"The Australian population would generally prefer to live outside the big cities if there was a suitable alternative," the report says.

But the report, which was obtained by the Australian newspaper under freedom of information laws and published in part on www.news.com.au yesterday, says state capitals will still account for a large share of population growth.

It says planners will need to consider issues such as the need to increase population density in the big cities, focus on new transport systems and more environmentally sustainable urban development, and protect scarce arable land.