The university first sounded its interest in the site, which encompasses Cumberland Hospital's east and west campuses, in November last year.

It has since vied off against 40 international education providers, medical research providers and manufacturers to secure the land.

NSW Premier Gladys Berejiklian announced on Sunday that the new campus would be built to "compliment" the government's plans to develop the Westmead health and education precinct.

"The transport links we're establishing through light rail and metro, and now to have the university partner with the government in having a comprehensive campus here, means definitely that the best and brightest in Australia and around the world are going to want to be studying right here," Ms Berejiklian said.

University of Sydney Vice-Chancellor and Principal Michael Spence said the new campus will focus on artificial intelligence, advanced manufacturing and data, and has the support of other stakeholders in the district including Western Sydney University and the University of NSW.

The first phase of development will see it able to hold 6100 students, as well as create 3100 local jobs, and more than 1000 affordable housing places and social infrastructures by 2030.

The second phase, to be completed by 2050, is projected to creating 20,000 jobs, as well as $13 billion added to the NSW economy.

“I am delighted that, following a market sounding process, the NSW government has chosen to negotiate exclusively with the University of Sydney to bring a shared vision to life. Our proposal presents a once-in-a-century opportunity to create an economic, intellectual, social and cultural asset in the heart of greater Sydney,” Mr Spence said.

“The campus will integrate research-led education with world-class teaching infrastructure and research facilities, complementary industry activity, community facilities and services, and key public services including a pre-K to 12 school.”

The area currently has the state's largest primary school and has 1630 students after a surge of 120 from the end of last year.

Sydney University anticipates enrolments for both tertiary and primary studies will come quickly and in high numbers, with 4 million people expected to call western Sydney home by the year 2050.

The new campus announcement comes amid the state government's western Syndey infrastructure plan, which will see a second Sydney airport built at Badgerys Creek, a new Parramatta Square that will cost the government $2 billion, as well as upgraded road and rail connections.

The redevelopment of the so-called Westmead Health and Education Super Precinct is costing the government $1 billion.