Work will recommence immediately on the $3.1 billion M6 Stage 1 tunnel after the NSW Government and Transport for NSW have reached an agreement with the construction consortium, CGU.

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Work on the M6 Stage 1 project was halted in March 2024 when a sinkhole 10-metres wide and 18-metres deep opened above the tunnels leaving a two-storey building in West Botany Street, Rockdale in danger of collapsing.

Previously referred to as the F6 Extension Stage 1, the twin tunnels from Arncliffe to President Avenue, Kogarah, which form the M6 Stage 1 project were originally scheduled to be completed in 2024.

Since August 2024, tunnelling has not progressed after underground works ceased.

Eighty-six per cent of tunnelling for the whole of the M6 has been finished and about 244 metres of the project remains to be completed.

CGU, a joint venture comprising CPB, Ghella and UGL, was awarded a design-and-construct contract worth just over $2.5 billion by the former government in May 2021.

The cost was later revised to $3.1 billion.

Last March, after two years of negotiations with the consortium, Transport for NSW issued a notice of default to CGU.

The notice required the contractor to return to site and resume substantive work, including tunnelling, in accordance with its current contractual obligations.

Today it was announced that an agreement has now been reached with CGU who will immediately resume all activities required to complete the project, under the terms of the original Design and Construct contract.

The agreement is at no extra cost to NSW taxpayers with Transport for NSW and CGU reaching a consensus that there are viable technical solutions to complete the remainder of the project.

Under the agreement, CGU has also agreed not to pursue contractual claims against Transport or the NSW Government for costs related to the two subsidence events in 2024, and will work to rectify the affected area.

Minister for Roads Jenny Aitchison said the agreement delivers the best value for NSW taxpayers.

"This agreement means construction will resume immediately under the original contract," Ms Aitchison said. "This agreement is at no additional cost to the NSW Government - protecting taxpayers just like we promised.

"Our priority has always been to complete this project under the existing contract.

"With 90 per cent of tunnelling already complete, we now have a clear path to finishing the job.

"The former government entered into this contract, and when push came to shove, NSW taxpayers were left in the lurch. Unlike the Liberals, we will not hand out blank cheques when contractors try to take NSW taxpayers for a ride.

"We've spent every day since coming into government working to secure the best deal for taxpayers.

"That's exactly what this agreement provides," she said.

"Transport for NSW Secretary Josh Murray said, "Transport for NSW has negotiated fairly and in good faith with CGU to achieve the result we are announcing today.

"CGU will now work to rectify the subsidence issues that originally paused the contract.

"While there has been a regrettable delay, the contract for the M6 Stage 1 has clear dispute resolution processes and these will be used - ending the threat of walk-offs and the need for termination- with a deed putting the interests of taxpayers, motorists and residents first."

NSW Motorways CEO Camilla Drover welcomed CGU's decision to resume delivery of the project as per the terms of the contract.

"CGU will resume work on the project immediately and we will provide an updated timeline for expected completion once we have it.

'We now turn our attention to building a collaborative relationship with our contractor to complete the project."

Transport will provide an update on the expected completion timeline in due course.