But the proposal has been panned by western Sydney director of the Sydney Business Chamber David Borger, who described it as “the stupidest idea I've ever heard”.

The member for Chifley will lobby for the new city, which he says would become Sydney's second-biggest central business district and avoid the traffic snarls choking other urban centres.

Mr Husic has not identified a location for his ambitious proposal. But it would serve the south-west growth corridor around Liverpool, Camden and Campbelltown, which is expected to house 300,000 residents.

Mr Husic said the custom-built city would allow better traffic flows than traditional, existing centres.

“We should be looking to design a new CBD from the ground up instead of relying on the old 18th-century grid patterns that have bedevilled Parramatta, Blacktown and Penrith … that hasn't allowed for natural movement corridors,” he said.

“There's got to be a better way that we can design our cities so people have jobs close to home and have a CBD that's functional.”

Mr Husic claimed Parramatta's mantle as Sydney's second-biggest commercial centre was under threat because “the days are ticking down as to how much more you can do in there”.

The plan is at odds with Sydney's draft metropolitan strategy, which rests on retaining Parramatta's role as western Sydney's biggest centre and expanding Liverpool and Penrith into regional cities.

Mr Husic was confident the plan would attract sufficient investment. He has not consulted his parliamentary colleagues nor spoken to experts, saying “I speak as a long-time resident of western Sydney”.

However, Mr Borger said attracting investment to western Sydney was already difficult.

He said new development could occur around the proposed Badgerys Creek airport but “it's such a silly idea to create new centres when existing centres already have potential”.

Mr Borger said walkable pedestrian grids had “served the world well for centuries”.

Federal Parramatta Labor MP Julie Owens said prospects of the plan coming to fruition were “remote” and Parramatta would “remain a major centre for decades”.

Parramatta lord mayor John Chedid described the proposal as “illogical” and costly.

He conceded that Parramatta's growth had led to traffic congestion, but cited plans for a ring road and a light rail network.

Urban Taskforce chief executive Chris Johnson was concerned by the plan, saying, "What we need is real focus to drive more jobs in the current centres. If we start diverting off that to new possible cities, it dilutes everything."