It has also committed to six new metro stations for Crows Nest, Victoria Cross in North Sydney, Barangaroo, Martin Place, Pitt Street and Central.

However, the government has yet to decide whether the metro line will run via a train station at Waterloo, in the inner-south, or one at Sydney University.

The construction of new stations between Chatswood and Sydenham will require the compulsory purchase of properties and cause disruptions to commuters. Temporary closures of Martin Place will be required during construction of the new station between Castlereagh and Elizabeth streets.

Transport Minister Andrew Constance declined to put a number on those property owners affected, saying that about 50 transport staff would begin discussions with residents.

"With any major project across the city, we are going to have to engage with property owners ... across the length of the project," he said on Monday.

"This is a 65-kilometre project. Everyone will realise that this is such an important project."

Premier Mike Baird said the new stations "would change the face of the city forever", providing many extra ways to get in and out of the city for work and leisure.

Under the government's plans, the new metro line will run from Rouse Hill to Epping, in a link due for completion in 2019 and costing $8.3 billion. That section will connect to Chatswood on the existing Epping to Chatswood line. The plan is then to extend it south to Sydenham via a new line under the CBD, where it will connect to the Bankstown line.

Study into new link to Liverpool

The government announced on Monday that it would begin looking into whether a new metro line could be extended from Bankstown to Liverpool.

Mr Constance said Liverpool residents via the council had wanted the review into extending the line to be fast-tracked.

"It's important to look at future expansion. We are pushing the limits in terms of the length of this type of train. This is a high-frequency, turn-up-and-go service ... and we are very conscious of the length of it."

An extension of the line would cut travel times to the CBD by up to 15 minutes and reduce crowding on existing train lines, he said.

Western Sydney Leadership Dialogue chairman Chris Brown said an extension of the metro line to Liverpool would help to solve rail access issues which had plagued the area.

"It has got to a situation where it is quicker to get to the city from Penrith and Campbelltown [than Liverpool]," he said.

Mr Brown said it also raised the possibility of a rail link between Liverpool and a new airport planned for Badgerys Creek.

"It's a shot in the arm for first stop Liverpool, next stop Badgerys Creek," he said.

It comes less than a week after the state and federal governments began work on an extensive study of possible rail links between the site for a new airport at Badgerys Creek and the central city, which could include a link to the Sydney Metro.

Waterloo or Sydney University?

The Baird government will also decide within the coming weeks whether the metro line will run via a train station at Waterloo, in the city's south, or Sydney University.

Mr Constance said the decision to select Waterloo or Sydney University was a "tough call" with "very different benefits".

"You have a need for urban uplift in the Waterloo area and then of course we have got 70,000-odd students who travel to the University of Sydney every day," he said.

"In many ways it's a difficult decision ... and we hope to have it done by the end of the year."

The university has proposed a $1.5 billion "knowledge hub" comprising shops, offices and research facilities if its preferred site at Maze Crescent is selected.

However, it faces competition from UrbanGrowth, the state government's property arm, which is pushing for a new station at Waterloo. UrbanGrowth has argued that the construction of a train station at Waterloo would allow more than 2000 public housing units in the inner city to be replaced with new ones.

Work on stage two of the metro line from Chatswood to Sydenham will begin before the end of 2018.

Tourism and Transport Forum chief executive Margy Osmond said a new metro rail line through the CBD was "just what the doctor ordered to relieve transport congestion in our city".