Sydney's Olympic site is set to host a new marquee event in the V8 Supercar calendar under a proposal by the sport's administrators.

V8 Supercars Australia and the Sydney Olympic Park Authority have drawn up a multi-million dollar plan to stage the event on a 3.4km street track at Homebush Bay.

The Daily Telegraph reports the proposal has already won the backing of NSW Premier Morris Iemma, with his special events department already involved in the project.

V8 Supercars Australia chairman Tony Cochrane said it was fitting for a great city like Sydney to hold a great street race.

"It has the infrastructure to handle a race like this," he told the paper.

"There is now real desire among a lot of sections of the community to have this race in Sydney.

"Homebush is the perfect place and the economic impact would be huge for Sydney and NSW."

The event would be worth upwards of $100 million over five years for the NSW economy, he said.

If approved, the first race is set to be run in the second half of 2007.

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