With high rhetoric but scant detail, Mr Turnbull and Mr Baird declared the venture "historic" as they signed a memorandum of understanding at Australian Technology Park near Redfern on Friday.

The Western Sydney City Deal, which is intended to provide a model for future arrangements, aims to deliver more jobs, transport, and services centred around a new airport at Badgerys Creek.

But there is as yet little information about the content of these deals, nor how they will change the regions in which they will operate.

Instead, Mr Turnbull spruiked the deal as a "very big change" in the federal government's relationship with the NSW government when it came to the investment in cities.

"What we've signed today is a historic step in the way the federal government works with state and indeed local government," the Prime Minister said.

"Historically there has been very little cooperation. The levels of government have often been passing each other like ships in the night without sufficient communication and collaboration."

Echoing the Prime Minister, Mr Baird said the city deal was a "historic moment", which replaced the previous approach of seeking commonwealth funding for individual infrastructure projects with a "much more strategic framework."

"It's not just about trying to tip dollars in, it's about trying to make a great city even greater," Mr Baird said.

The venture represents yet more emphasis by the NSW government on the growth and economic potential of Western Sydney, where an additional one million people are expected to settle over the next two decades.

Following the previous day's windfall, when the government announced the $16 billion lease of electricity operator Ausgrid which will inject $6 billion into state coffers, Mr Baird said the government "now had the financial capacity to do more."

The Premier also flagged future funding commitments from the Turnbull government, but added it was "too early to commit to specific projects."

The federal government is spending about $3 billion on road upgrades around the Badgerys Creek airport site, but has resisted calls to build a rail line to the airport for its opening in 2026.

According to government projections, about 9000 jobs will be created by the Badgerys airport by the early 2030s, and another 60,000 jobs in the decades after that.

The concept of a city deal is imported from the UK. There, the national government has signed long-term contracts with local governments, aiming to increase job creation, housing supply, and transport infrastructure.

The federal assistant Minister for Cities, Angus Taylor, had previously indicated that details of a western Sydney city deal would not be available until next year.

As well as western Sydney, Mr Turnbull has promised city deals for Townsville and Launceston.

Labor's planning spokesman, Michael Daley, said Mr Baird's announcement resembled a Monty Python sketch. "He and his eastern suburbs mate Malcolm Turnbull can't even make it to the western suburbs to make an announcement about jobs in the west," Mr Daley said.