An underground track to Mortuary Station on Regent Street has been flagged as a possible extension to the Goods Line, a former freight corridor between Central and Pyrmont that is being redeveloped as a civic ''spine'' to connect the city to Darling Harbour.

The 800-metre tunnel under Railway Square emerges behind the ABC studios in Ultimo, where it meets a section of track that was converted into a walkway in 2002.

A Transport for NSW report said a feasibility study would consider whether the abandoned tunnel could be redeveloped for pedestrian and bicycle access.

Transport Minister Gladys Berejiklian said the government was keen to look at ''innovative'' ways to improve cycling and walking links ''and I look forward to seeing what further investigations into this potential option show''.

The feasibility study is not expected to start until after the redevelopment of the Goods Line North, a 500-metre elevated section of track running from the Ultimo Road rail underbridge to Hay Street.

Its opening as a multimillion-dollar, wifi-enabled, elevated park and thoroughfare is slated to coincide with the opening of the adjacent Frank Gehry-designed business school at the University of Technology, Sydney later this year.

Planning Minister Brad Hazzard described the Goods Line North as ''Sydney's version of the New York High Line'' - an old Manhattan freight line transformed into a lauded urban renewal landmark - when the plan was unveiled in 2012.

But the same level of ambition has not yet been articulated for Mortuary Station. It was used to transport bodies and mourners to cemeteries until the early 1940s.

The high Victorian gothic building, dating back to 1869, has housed everything from horses to a pancake restaurant in the years since.

The Transport for NSW report Sydney's Walking Future said the Goods Line could be extended further down the track towards Redfern if the tunnel to Mortuary Station was redeveloped.

''All details of the projects are dependent on the findings of the feasibility study,'' a spokesman said.

Jesse Adams Stein, an academic and long-term advocate of the Goods Line through her Ultimo blog, Penultimo, said redeveloping the tunnel would disperse some of the foot traffic from the nearby Devonshire Street tunnel.

''But it won't necessarily be a major player in terms of helping pedestrian and cycling flows in the area because you've got that big railway section in the middle which blocks off the cross-flow between Chippendale and Ultimo on one side, and Redfern/Surry Hills on the other.''

Ms Adams Stein said: ''Opening up spaces for pedestrians and cyclists is always a good thing.''