Dolla Merrillees has been appointed as the new director of the Museum of Applied Arts and Sciences, which includes the Powerhouse Museum in Ultimo, and will lead the relocation of the cultural institution to Parramatta.

Deputy Premier and Arts Minister Troy Grant announced Merrillees' appointment on Monday as NSW Premier Mike Baird revealed the new Powerhouse Museum will be built on the banks of the Parramatta River on the site of the former David Jones car park.

The relocation of the Powerhouse is expected to cost hundreds of millions of dollars. The NSW government is proceeding with the move despite vigorous opposition that included a petition signed by more than 10,000 people.

The petition triggered a parliamentary debate in February, while more than 170 prominent people, including actor Cate Blanchett and former premier Bob Carr, signed an open letter published in the Sydney Morning Herald with the heading "Please Don't Destroy the Powerhouse".

A former trustee and museum consultant Kylie Winkworth, an opponent of the move, expressed concern about the museum's move to Parramatta.

"I think the museum is committing suicide," she said. "It's very sad. Incredulity is sweeping the museum community ... Not one experienced museum professional thinks this is a good idea. Not one."

The Independent member for Sydney, Alex Greenwich, said he welcomed Merrillees' appointment, but expressed scepticism over the NSW government's plans to relocate the museum to Parramatta.

"It is unclear whether the government's plan is viable, has the support of the local Parramatta community, or whether the required recurrent funding for the new museum is in place," he said.

Merrillees had been acting director of the Powerhouse since the abrupt resignation of Rose Hiscock in December last year and was previously the museum's curatorial, collections and exhibitions director.

Hiscock​ resigned in November, less than three years into her tenure, to take up the role of director of Melbourne's Science Gallery. She had initially opposed the relocation to western Sydney before changing her mind.

Grant said Merrillees had excelled as acting director during the past four months and "she is as excited as we are about planning for the museum's future through its relocation to Parramatta".

"With the new Powerhouse site being announced today, Ms Merrillees' knowledge of the museum's collection and vision for its future will come to the fore to create a museum that will be the envy of other global cities," he said.

Merrillees said in the press release she was honoured to take on the role: "Deepening audience engagement, bringing the collections to life through hands-on experiences and offering a variety of pathways through ideas and information is key. We are a contemporary museum for a smart and creative city."

Merrillees had previously declined to say whether she had applied for the role, but told Fairfax Media in December she was not opposed to the move to Parramatta.

"I have been instrumental in and actively engaged in developing our vision for MAAS Parramatta as well as the business case to deliver a once-in-a-generation opportunity to invent a museum for the future," she said.