The harbourside hub of New South Wales state, home to some 4.28 million residents in 2006, will experience a 40 percent increase in population to 5.98 million people by 2036, the state's planning minister, Kristina Keneally said.
The population of New South Wales, measured at 6.82 million in 2006, will increase by one-third to reach more than nine million people by 2036, due to migration and an increase in births, Keneally said.
This figure is an increase of 440,000 people on estimates made in 2005.
"The new projections make it clear that New South Wales and Sydney will continue to play a pivotal role in the Australian economy," Keneally said in a statement.
The figures showed that the biggest growth in New South Wales between 2006 and 2036 will be in the number of people aged over 65 - up 111 percent - as the baby boomer generation ages and life expectancy increases.
Although the annual number of births is projected to rise by 18 percent by 2036, the number of people aged over 65 will also increase, accounting for 21.5 percent of the state's population by 2036 compared with 13.5 percent in 2006.
Life expectancy at birth will also extend over this time period - from 79.1 years to 85.6 years for males and from 83.9 years to 89.1 years for females.
Sydney will continue to act as the primary gateway to Australia for overseas migrants, but the coastal regions outside the city are projected to experience strong population growth due to net migration gains, the minister said.