The University of New South Wales wants to redevelop part of the Canberra Institute of Technology's Reid campus and a prime slab of land on Constitution Avenue into a second Canberra campus.
The university has 3200 students enrolled at its campus at the Australian Defence Force Academy in Campbell.
However UNSW Canberra rector Michael Frater revealed they were in talks with the ACT government about bringing up to 10,000 more students to the capital within the next three years with new courses and an innovation precinct, where researchers would work hand-in-hand with industry.
"We've been looking at what our presence in Canberra should look like in future," Professor Frater said.
"UNSW has been in Canberra for 50 years, it's a good time to be looking forward at the new things we might do."
The university would redevelop part of CIT's current campus and the car park opposite into student accommodation, and research and teaching facilities. Professor Frater said the extent of the CIT redevelopment was still being discussed but the training provider would continue to operate at the site.
He also indicated the university would like to develop the whole car park.
"If you look at whole site it's 10-12 hectares, as a university campus that's a modest sized campus so it's a reasonable aspiration [to develop the entire site]," Professor Frater said.
Chief Minister Andrew Barr said as UNSW was making a "significant investment" in Canberra, the ACT government's would make the land available as their "contribution".
Mr Barr said the exact dollar figures would be nutted out in a memorandum of understanding between UNSW and the territory government but would likely take the same shape as the one with the Australian National University, where parcels of land with specific lease purposes were made available at a discounted rate.
"Followers of higher education history in this city will be aware that a little over a decade ago the ACT government entered into a partnership with the Australian National University to develop the western edge of our CBD," Mr Barr said.
"In that context we intended on the eastern side of the city with UNSW Canberra and the CIT located across the road to establish and build on further significant education precincts."
The development - which is on the corner of the Parliamentary Triangle and would require National Capital Authority approval - would be "landmark", Professor Frater said.
"It's a very old site with very low density on it and we would be looking to develop something that's sympathetic to the surrounds but at high density," Professor Frater said.
The courses that would be offered are yet to be determined, but Professor Frater said they would be new to Canberra and would try to appeal to students outside of Defence.
UNSW has had a campus in Canberra for 50 years through agreements with the Department of Defence, first at the Royal Military College Duntroon and from 1986 at ADFA.
Professor Frater said the university was outgrowing its campus there and was prevented from further expansion because it did not own the site.
"We need a facility we can control," he said.
UNSW Canberra and the ACT government will finalise their memorandum of understanding this year before putting together a more detailed proposal next year.
It is also unclear what impact the proposal will have on the City to the Lake project and the reconstruction of Parkes Way.
Last year Chief Minister Andrew Barr said the stormwater pond at the Coranderrk Street and Parkes Way roundabout had to be relocated to increase the size of the block opposite the CIT for sale.
Mr Barr said the pond would still be moved in "due course".