The demolition of Sydney Football Stadium will begin less than three months before the 2019 state election despite Labor opposing the knockdown.
The Department of Planning and Environment on Friday approved the first stage of Allianz Stadium's $730 million redevelopment at Moore Park, with demolition to start in January.
The approval includes a number of conditions, including the establishment of a community consultative committee before any heavy demolition begins.
The coalition government confirmed on Friday that Lendlease will build the new stadium which is expected to be completed by early 2022.
Sport Minister Stuart Ayres insists the stadium has "run its course" and is outclassed by other facilities across the country.
"We are not going to stop and slow down building critical infrastructure because there's an election around the corner," Mr Ayres told reporters in Sydney on Friday.
NSW Treasurer Dominic Perrottet noted the stadium was built in 1988 and Sydney deserved a "world class" facility.
NSW Opposition leader Michael Daley on Friday accused the government of rushing into a "bad decision" by awarding the contract before the election.
If Labor wins power in March it will re-negotiate the contract so NSW taxpayers don't pay for the redevelopment, Mr Daley told reporters.
Instead, he'll offer a loan to a private group or the Sydney Cricket and Sports Ground Trust to rebuild the city stadium.
"I will not be bullied or intimidated into a bad decision," Mr Daley told reporters.
"You will not pay a single cent for the redevelopment of the stadium."
The Sydney Business Chamber backed the coalition's plan saying it will ensure the city becomes the premier sporting destination in the country.
"While other state governments across Australia have spent billions of dollars developing world-class stadiums, NSW has stood still," executive director Patricia Forsythe said in a statement.
"The redevelopment will put NSW back on the world stage."