The NSW Government will refurbish, not demolish, the Sydney Olympic Stadium.

Premier Gladys Berejiklian has backed off a planned $2 billion project to scrap the 80,000-seat stadium at Homebush.

The Government says plans to demolish and rebuild the Sydney Football Stadium at Moore Park will continue, but that it will now cut about $500 million from its former plans by refurbishing about “two thirds” of the Olympic Stadium instead.

“This will change the atmosphere of the entire stadium,” she said.

“But importantly it will provide a rectangular stadium with fans closer to the action. That is what is required for a world-class stadium.”

The original plan was for Stadium Australia to be demolished in 2019 at a cost of about $1.3 billion, but the policy caused divisions in the NSW Government.

“We've listened to the community, we know the public would have thought that is too much to spend,” Ms Berejiklian.

The Premier had previously claimed modelling showed a complete renovation of the venue would cost more than demolishing it, and has now been called to explain the abrupt reversal of this claim.

“We don't apologise for listening to the community and doing our homework,” she said.

Sydney Lord Mayor Clover Moore says the business case for the full set of stadium plans had still not been provided.

“There is no budget breakdown so it is impossible to do an independent review of the figures, and after all this work the NSW Government still can't manage to stack up their figures so that they can claim to break even,” she said.

“For all of this money, the NSW Government is estimating just a 15 per cent increase in patronage — with no explanation of how they'll attract more events or how they'll deal with them.”