The former premier recalled yesterday that Mr Hartigan - who heads Rupert Murdoch's Australian operations, including the Sydney tabloid The Daily Telegraph - attended a meeting at the premier's office to enthusiastically advocate the event. "[He said] for Sydney and NSW it's a big sport event, it would be sad for it to be lost from Sydney," Mr Iemma told the Herald . "[He said] Eastern Creek's just not suitable."

Also at the meeting was Bruce McWilliam, commercial director of Channel Seven, the broadcaster for the V8 Supercars. Seven's chief executive, David Leckie, did not attend but confirmed through a spokesman that he, too, lobbied Mr Iemma personally and wrote a letter of support for the project.

Mr Iemma strongly denied being unduly influenced by the media giants, but said their arguments were forceful.

And yesterday, the new Premier, Nathan Rees, announced yesterday that he would rubber-stamp the project at a cost of $30 million to taxpayers - at a time when the Government faces a $1 billion budget black hole.

"This is great news for Sydney and NSW, and will add more than $100 million to the NSW economy," Mr Rees boasted at Olympic Park. He said he approved it because he did not want to see it lost to another city.

But the federal Labor MP for the area, Laurie Ferguson, said it was all about "News Limited and Channel Seven - they're trying to please them". Labor's state candidate for the Ryde byelection is another opponent, as are the Sydney Olympic Park Authority, led by the former Olympics minister Michael Knight, and the Events NSW chief John O'Neill. Officials in the Premier's Department - labelled "latte sippers" by one race supporter yesterday - are understood to have advised against it.

The state Opposition and environment groups have joined the chorus of disapproval. The project, critics say, will damage prospects to develop residential and commercial buildings in the Homebush area, disrupt local neighbourhoods and involve the removal of 140 trees.

The race will run in December each year for five years, starting next year. Senior government sources confirmed that the process to approve it was complete when Mr Rees came to power. It had already gone to the cabinet budget committee without its main opponent, the then planning minister Frank Sartor, finding out.

Mr Iemma recalled Mr Hartigan's forceful points at the meeting "a few months ago".

"The things that Hartigan said were the popularity of the sport, the number of people who follow it and just the iconic nature of the event, the V8s."

Mr Iemma has previously admitted being lobbied to allow the gaming giant Betfair to operate in NSW while dining at the home of the then Channel Nine boss, James Packer, in 2005.

A spokesman for Mr Hartigan, Greg Baxter, said News Limited did not have a commercial interest in the race. Mr Hartigan's advocacy was about representing the interests of western Sydney. "News and all who sail in her have absolutely no commercial or any other kind of arrangement with V8 Supercars," Mr Baxter said. The Telegraph believed the typical supercar fan and its readers were a "good fit".

The V8 Supercars chairman, Tony Cochrane. felt moved to extend his thanks at yesterday's launch, saying: 'To John Hartigan from News Corporation and David Leckie and Bruce McWilliam from the Seven Network, all people who believed in this event who have unashamedly stuck with us and helped push our case for a long long time … thank you very much.'

One of its strongest advocates has been the State Development Minister, Ian Macdonald, who has been dubbed the "minister for V8s". Another strong advocate is the self-confessed "rev-head", the Treasurer and former roads minister, Eric Roozendaal. There is a belief in the Government that the announcement by the self-confessed "westie" Premier could win some votes in western Sydney, where Labor has several marginal seats. But Mr Rees admitted yesterday it could do dome damage in the Ryde byelection.

The Opposition Leader, Barry O'Farrell, said the Premier had refused to "rule anything in or out" ahead of the November mini-budget, yet he had agreed to spend $30 million on a street race. "It makes no sense to have this race at Homebush, particularly when the State Government has spent the last two years attracting thousands of office workers to work in that precinct," Mr O'Farrell said.

"This money would be better spent on upgrading Eastern Creek to ensure that the V8 Supercar race could be held at that motorsport venue."

with Wendy Frew, Alexandra Smith and Matthew Moore