An extra $400 million in windfall tax revenue will be tipped into a fund to provide water, electricity, roads and other infrastructure to accelerate construction of new housing to help tackle the Sydney affordability crisis.

Premier Mike Baird has announced the money will be in next Tuesday's budget as the government books more than $5 billion in residential stamp duty revenue this financial year from the booming Sydney property market.

The Housing Acceleration Fund was announced in 2012 and seeded with $481 million in windfall tax revenue, including from residential stamp duty.

So far $566 million has been spent from the fund on infrastructure projects to help create housing and employment lands in new growth areas across NSW.

The additional $400 million will also be spent on supporting increased housing in existing residential areas, known as "in-fill" development as well as improving "infrastructure and amenity" in those areas.

It brings the total committed to the fund since 2012 to $966 million.

Mr Baird said the money "will help put the dream of home ownership within reach of more young families".

"One of the most important things we can do to improve housing affordability is to increase housing supply," he said.

The government says the fund has already supported 161,000 new dwellings and 1200 hectares of employment lands in NSW. It expects the new money to "at least" double that number.

Treasurer Gladys Berejiklian has been under pressure to address the housing affordability crisis in Sydney since it was revealed the government had reaped a record $5.1 billion from residential stamp duty this financial year with one month remaining.

Ms Berejiklian said the government knows housing affordability "is a very big issue for a lot of people" and the new money "will help to put downward pressure on prices."

But opposition leader Luke Foley said the money "will do next to nothing to address housing affordability."

"Increasing housing supply is part of the answer to housing affordabilty but the problem is the Liberals think it's the only answer," said.

"Simply increasing supply on its own will not make housing affordable to the 70 per cent of 35 year old locked out of the first home buyers' market".

Mr Foley said we were witnessing "a case of market failure" in the Sydney housing market.

The government needed to have a greater focus on affordable housing for key workers such as nurses, police and teachers.

"I would be prepared to allow developers to gain more floorspace and build higher and build more homes if the deal is that a proportion of that extra development that is granted be delivered as affordable housing," he said.

"If the new planning minister [Rob Stokes] wants to have another crack at amending the planning act then parliament should look at creative solutions to boost the stock of affordable housing."