The Land Development Agency has released a scaled back plan to redevelop the vacant land next to the suburbs of Yarralumla and Deakin for 1600 dwelling sites.

The area for redevelopment has been reduced from the original master plan from about 60 to 40 hectares and a new park has been added to incorporate the Railway Remnants heritage area.

The redevelopment of the infill site has been on the cards for years and plans will now progress with the first land to be released in about three years.

The Planning and Development Strategy for the Canberra Brickworks + Environs (2014) presents an alternative to what was slated about four years ago in the draft master plan.

The site will not include the land adjoining the future Cotter Road alignment and instead the boundary will align with Dunrossil Drive and entry to the Governor-General's estate.

The commercial space has been reduced and will primarily be located in Deakin alongside the West Deakin Business Park.

The density of development has also been decreased with open space retained between the existing residences in Yarralumla and stepped storey development.

Preliminary "make safe" works will be made at the brickworks so the area will be publicly accessible and it will adjoin the already slated Quarry Park.

The area will be used for activities such as community and cultural events and pop-ups to support new and creative enterprises.

Future opportunities for adaptive reuse of the brickworks will also be explored.

Economic Development minister Andrew Barr said it was an important development for the city in a difficult economic period and the government's investment would leverage private sector investment.

"It will provide an economic dividend but in addition to that we get a solution for what is an iconic part of the city," he said.

"We'll get a vibrant new urban precinct with a range of new parks and recreation spaces for the community."

He said there had been a number of ideas canvassed as part of consultation from "mothballing to the national icon" but the priority was work associated with conservation and ensuring it was an area that could be used.

"I think it's getting ahead of the process to talk in terms of national tourist icon but it think it will be a place that people will enjoy coming to and those who chose to live in the area will have a fantastic lifestyle," he said.

Mr Barr said heritage decisions made by the ACT Heritage Council had had some impact on the plans and had been incorporated into the new proposal.

Land Development Agency deputy chief executive Dan Stewart said the new proposal was a result of the community feedback received as part of the consultation process a couple of years ago and the views of the agency board.

"The brickworks itself is a wonderful asset for Canberra and for many of us having that truly historic precinct surrounded by chain wire fence is an undesirable outcome," he said.

Mr Stewart said the upfront investment in the brickworks would also enable a future commercial use if that became economically viable.

Project director Kristi Jorgensen said the release of ACT planning documents following on from the draft plan had solidified the need for urban infill development in the city.

She said the LDA had looked at trying to increase the densities but keep them low where they meet the existing homes within Yarralumla.

"The height strategy is very much predicated on keeping it low at the Yarraluma side and stepping it up towards Cotter Road," she said.

Residents in Yarralumla, Deakin and Curtin will receive a project newsletter in the mail next week ahead of an information session at the end of the month.

The redevelopment of the brickworks requires a change to the Territory Plan and an amendment to the National Capital Plan, and environmental clearances because of the presence of the golden sun moth and native grassland.

It is expected that the first land will be released during the 2016/17 financial year.

About $3 million was allocated in the most recent ACT budget towards removing contamination from the site.