The O'Farrell government must halt the sale of 200 historic homes at Millers Point, because it failed to properly assess the potential heritage damage or seek appropriate advice, the National Trust says.

Private buyers have already been encouraged to register their interest in public housing properties at Millers Point and the Rocks, where 400 public housing tenants are set to be evicted over the next two years.

The government says the heritage value of Millers Point will be protected. Critics argue the sale ignores the social significance of the public housing tenants, some of whom have links to the suburb stretching back five generations.

National Trust NSW chief executive Brian Scarsbrick called for an immediate halt to the sales process and evictions. Mr Scarsbrick said the trust was not consulted ''despite the entire area being listed on the National Trust register'' for the past 36 years.

The suburb of Millers Point is also listed on the state heritage register as a ''living cultural landscape'' with ''an unusually high and rare degree of social significance''.

Mr Scarsbrick said the government must consult the community and give ''proper consideration'' to the state and national heritage impacts.

The sale is expected to generate hundreds of millions of dollars.

Community Services Minister Pru Goward says the proceeds will be reinvested into social housing to help alleviate long waiting lists.

An Office of Environment and Heritage spokeswoman said the sale was allowed under heritage laws.

The NSW Heritage Council must approve changes that affect the buildings, and may also require measures to maintain social significance, such as ''on-site interpretation of the social values and collating an oral history'', the spokeswoman said.

The decision has raised fears that other public housing sites on prime land are also earmarked for sale.

Leichhardt mayor Darcy Byrne will write to other inner-city councils including the City of Sydney, Ashfield, Marrickville, North Sydney, Randwick, Rockdale, Waverley and Woollahra, asking them to join a campaign to prevent public housing sell-offs.

The government's Land and Housing Corporation sells about 1000 public housing properties a year to help manage a massive budget shortfall - an approach described by an auditor-general's report last year as ''not financially sustainable''.

A department spokesman said it would start building 276 new dwellings this financial year and expects to finish another 379.

Housing officials last week began interviewing tenants to determine where they will move to.

Millers Point resident action group chairman John McInerney said it had urged residents not to attend any meetings until legal options had been explored.

Tenant advocates have also advised residents to delay relocations to allow more time to fight the evictions. However a department spokesman said tenants who met with officials soon ''will have more options than tenants who leave things to the last minute''.