James Packer's controversial $2 billion Barangaroo casino and hotel will be built after the development was approved by the NSW Planning Assessment Commission.

The PAC imposed a number of restrictions on the development, including requiring a 30-metre setback from the harbour, expanding nearby Hickson Park, and increasing the amount of affordable housing in the complex.

The commission said the changes meant "the public good has been given a more equal status with the private good".

While the PAC said the casino and hotel "is of iconic standing and design excellence," it noted it did not have the power to move the location due to the NSW Parliament's support for the project.

"The NSW Parliament passed legislation in 2013 that specified the siting of the Crown Sydney Hotel Resort's restricted gaming facility on land previously earmarked as public open space on the foreshore of Barangaroo South," the PAC said in a statement.

Packer paid $100 million to the NSW government in 2014 as part of a deal to obtain a second Sydney casino licence. The granting of an additional licence in Sydney has been controversial.

The project has undergone numerous changes since its initial conception.

It is expected the project will be complete by 2021, two years later than expected.