Cruising Yacht club of Australia commodore Paul Billingham made the decision shortly after 11am (AEDT), just under 90 minutes before the race was scheduled to start.

Supermaxis Wild Oats XI, Black Jack, SHK Scallywag and InfoTrack, plus smaller boats Naval Group and URM, were listed to contest the race scheduled to start at 1230pm.

Commodore Billingham said he was very disappointed, but the call was made for the safety of spectators, public and competitors, after consultations with several parties.

"We spoke to the Bureau (of Meteorology), we spoke to the Harbour Masters, we spoke to the Waterways, we spoke to the skippers and no-one was saying they really really want to go," the commodore told AAP.

"We figured safety was the priority there and while we were probably not that concerned about the yachts hitting each other, it was the spectator fleet that we were really worried about and that's the challenge.

"Our sailing office was in consultation with the boats throughout the morning and our sailing manager actually went out on a boat into the middle of the harbour and took some readings on the visibility.

"We're very confident we've made the right decision and there's been no negative feedback from any of our skippers today."

He said while the start could have been delayed a couple of hours and conditions did lighten a little later on, it would have been have been too dangerous to race on Tuesday.

Billingham also said it wouldn't have been practical to reschedule the event to another day.

"The southerly wasn't expected to come through with any force until later on today and we can't keep the supermaxis hanging around four or five hours," he said.

"Postponing until tomorrow wasn't an option. They are all into their pre Hobart schedule."

He said it was the worst smoke he had seen affect Sydney Harbour.

"We've had smoke around for weeks and generally it's not interfered with any racing,'" Billingham said

"But It came in thick and heavy from the north this morning and has hung around.

"It's a lot lower and a lot denser than we've had before."

Australian Associated Press