The increased berthing capacity for cruise ships from such a move is "desperately needed", according to peak tourism industry group the Tourism and Transport Forum.

“Cruising is the fastest growing part of the tourism industry and is predicted to generate $1 billion a year for the NSW economy by 2020 and increased cruise ship access at Garden Island is essential to that growth,” said TTF chief executive Ken Morrison.

Prime Minister Kevin Rudd announced on Tuesday that a taskforce would be set up to consider moving some or all of the navy fleet to Queensland.

Mr Morrison said: “As ships get bigger, the demand for berths east of the Sydney Harbour Bridge has continued to grow. The overseas passenger terminal is in almost constant use during the summer cruise ship season (October to April) and a third of cruise ships cannot fit under the Harbour Bridge, with that figure to rise to 56 per cent by 2020."

Mr Morrison said some cruise ships had been able to access Garden Island on an ad hoc basis but that cruise lines need greater certainty. “Ship schedules are locked in years in advance and cruise operators need confidence to invest long-term."

The general manager of the Cruise Lines International Association Australasia, Brett Jardine, said the industry would welcome any move that improves berthing capacity.

"Every year we are welcoming more and more ships to our shores, so there is huge demand for berths in Sydney Harbour, particularly over the summer months,” Mr Jardine said.

“While Sydney presently has two cruise terminals – one at Circular Quay and one at White Bay – only smaller ships can pass under the Harbour Bridge to use the White Bay terminal. The situation is restricting cruise lines' ability to visit Sydney and ultimately will curtail the significant economic benefits which cruising delivers."

Cruising is surging in popularity with the number of Australian cruise passengers growing by 20 per cent a year for the past decade.

CLIA figures show that almost 700,000 Australians took a cruise in 2012, while an estimated 100,000 international visitors travelled to Australia to join a cruise in local waters.

The cruise industry delivers an estimated economic benefit of more than $600 million to NSW annually and more than $800 million nationally.

The industry has been calling for a second terminal east of the Sydney Harbour Bridge for about five years, but the urgency has increased in recent years due to the rapid growth of cruising.

Among those calling for extra berths east of the bridge has been the Royal Caribbean cruise line.

"None of our ships will fit under the Harbour Bridge," said the line's regional vice president Gavin Smith.

“Modern cruise ships are too big to do so. To continue to grow we need certainty, in particular berthing certainty. Asian ports have provided this in Singapore, Hong Kong and Shanghai with brand new dedicated cruise terminals. More and more cruise ships are visiting these ports as a consequence.

“Sydney, as the gateway to the Australian cruise industry, needs to respond to this competition within our region. This will ensure that the other cruise destinations in Australia and New Zealand can share in the economic growth of the local industry.”

Meanwhile, Sydney's overseas passenger terminal which is more than 50 years old, is due to get a revamp during cruising's off-season between April and September next year.

The revamp is designed to improve its efficiency and increase its capacity for liners. Last February alone, a record 36 ships visited Sydney, 20 of them berthing at the terminal.