As many as 2000 new homes in towers up to 23 storeys tall could be built next to one of Sydney’s oldest heritage sites after the NSW government gave the project a key green light, as state and federal leaders continue to battle an enduring housing crisis.

The state government on Friday announced it had finalised rezoning for the Parramatta North precinct – a 33HA new mini-city in Sydney’s west.

The project is set to feature buildings between two and 23 storeys, provision for a new university campus to support Westmead Hospital, and 10Ha of public, open space.

Located next to the Parramatta Female Factory – Australia’s oldest surviving female convict factory – buildings of “high or exceptional heritage significance” are set to be conserved, while under-utilised government-owned land will be progressively released over the next four years, including for housing and mixed use development.

NSW Premier Chris Minns said the project was an opportunity to establish “a new community” in the city’s booming west “while protecting and celebrating one of Australia’s most significant heritage sites”.

“We want a city where people can afford to live, where young people have the opportunity to stay close to their families and communities, and where working people aren’t locked out of the city they helped build,” Mr Minns said.

The project is located along the Parramatta Light Rail corridor connecting Westmead to Carlingford via the Parramatta CBD, with connections to the Sydney Metro.

Of the about 2000 new homes, at least 100 will be affordable homes, according to the government.

Parramatta North is expected to drive up to 12,000 new jobs by 2047, including in health services and research at the nearby Westmead hospital precinct.

Planning Minister Paul Scully said, through careful planning, the site would “become a well-connected, vibrant precinct for thousands more Sydneysiders to call home”.

“Good neighbourhoods don’t happen by accident; they are built through a combination of careful planning and the right infrastructure,” he said.

“We’re delivering the homes, jobs and open space our growing community needs while retaining Parramatta’s cultural heritage at the heart of this precinct.”

Parramatta MP Donna Davis said extensive community consultation had led to 10HA being set aside for public space, parks, and gardens.

“We are committed to maintaining the 6Ha Parramatta Female Factory and Institutions Precinct in Government ownership and it is not included in the rezoning,” she said.

“The approved master plan and rezoning have reduced the number and scale of building adjacent to the precinct, opening sightlines and vistas to and from the heritage buildings.”

Progress on the project comes more than a year after it was first announced and just months before the next state election.

It joins a number of high-profile housing developments aimed at affecting Sydney’s housing market – one of the most expensive in the world – including controversial rezoning of land around the revived Woollahra train station project, Bays West on Glebe Island, and the old Sydney Fish Market site.

Originally published as Parramatta North mini-city with 23 storeys, housing 2000 homes, green-lit for heritage site