New South Wales state Premier Mike Baird said if he wins re-election as predicted on March 28, efforts would begin to bring the race from Melbourne, where it has been held for 20 years.
"I believe we have sat back too long and let Melbourne take all the events it wants," he told reporters.
"We've grown our own events, we've boosted the budget and we want the best events for this city. We'll do it on the basis that it brings economic benefits to this state."
Rod McGeoch, who led Sydney's 2000 Olympics bid, would front a bid team of experts.
They would study the benefits and costs of staging the race which currently opens the Formula One season and reportedly costs Melbourne US$46 million (S$63.4 million) a year to host.
But Australian Grand Prix Corporation chairman Ron Walker hit back saying the event, which will be held on Sunday at Melbourne's Albert Park, was locked into the Victoria state capital until at least 2020.
"(Baird's) team of advisers have advised him very wrongly," he told ABC television.
"We have a contract with (Formula One Group chief executive Bernie) Ecclestone until 2020 and we have another five-year option... so it's a long time before Sydney could even think about it."
Walker added that the five-year contract will probably be extended to 10 years in the next few months.
Adelaide lost the Australian GP to Melbourne in 1996.