The government's three design options for the massive redevelopment, released last week, included towers up to 40 storeys and as many as 7200 homes, more than triple the 2000 current residences.

Cr Moore said plans for the project would turn the area around the Waterloo metro station into "one of the highest density precincts in Australia".

She said the revamp had been proposed "despite the fact that it is already surrounded by other huge development sites, with no detail about how the area will cope".

The estate will join the Waterloo “Metro Quarter”, proposed for a large block around the metro station, which includes 700 apartments across four apartment blocks between 14 and 29 storeys.

"Nearby is Australian Technology Park - which will see more than 10,000 extra workers in the area - and the Green Square development site which will be home to 61,000 people and 22,000 workers," Cr Moore said.

Her concerns over congestion coincided with Premier Gladys Berejiklian's separate plan, announced on Tuesday, to partner with tech giant Atlassian to create a "technology and innovation precinct" in the nearby Central station to Eveleigh corridor.

That project is set to generate 10,000 jobs in the area by 2036.

Cr Moore said of the Waterloo redevelopment: "This is a planning disaster and a significant threat to Sydney’s future economic growth and livability.

"The reality is that the pretty pictures in the government’s brochures will turn out to be the ghettos of the future.

"Tall dark towers next to overshadowed parks and streets gridlocked by congestion."

The government's three design options - Waterloo Estate, Waterloo Village Green and Waterloo Park - each include at least 6500 dwellings, shops, open spaces and access to public transport.

Social Housing Minister Pru Goward said the proposals were designed using input from residents and the community, and further public feedback would help inform the project's masterplan.

The new development, which will be a mix of social, affordable and private housing built over 15 to 20 years, has previously drawn criticism from thousands of residents who will have to relocate.

The plans indicated development would start in lower density areas of the estate.

The first tenants will not need to relocate until late 2019, and the government says all residents will have the option to return to the site.

Residents of the site's most prominent blocks, the 30-storey Matevai and Turanga towers, as well as the Cook, Banks, Solander and Marton buildings, will not need to move for at least 10 years.

REDWatch spokesman Geoff Turnbull said the community group welcomed the early release of the design options, which will be open for public feedback until the end of October.

"The downside is there are people on the estate who'll be looking at these proposals and won't see their building on there, and what that's likely to do is increase the anxiety on the estate because it makes it all real," he said.

Waterloo Public Housing Action Group chairman Richard Weeks said the timeframe for the redevelopment had eased many residents' fears over the relocation process.

"If they're going to do it in smaller lots, one bit at a time, most people could handle that."

Cr Moore said the development offered "shockingly little" to ease the inner city's lack of affordable housing.

But Ms Goward said the plans showed at least 5 per cent of residential dwellings would be affordable housing "in line with Greater Sydney Commission targets".

Urban Taskforce Australia chief executive Chris Johnson praised plans for high-rise buildings around the metro station and said the design options "set the framework for a positive development".