Located in the heart of the harbour, locals have long been arguing Cockatoo Island could be better used, the Harbour Trust which oversees the island says.

Under a new plan, released for public consultation on Tuesday, the UNESCO World Heritage site would be home to a bevy of new public attractions.

Among them are a new creative precinct, envisioned to host performances and events, and a revamped Fitzroy Dock with exhibitions pavilions and an array of dining options.

Camping on the island would also be expanded under the drafted concept, and a new playground, harbour boardwalk and expansive parkland built.

Preserving the island's Indigenous and historical sites of significances are key to the plan, Harbour Trust chair Joseph Carrozzi said.

"We want to create a truly special destination for both Sydneysiders and all visitors - a destination that acknowledges the historic significance of Cockatoo Island for First Nations peoples, and its important role in the history of modern Australia, from our convict and colonial past to our industrial and military history," he said in a statement.

Consultation closes on June 11.

Australian Associated Press