A delay in the construction of a Sydney freight rail line has left hundreds of workers destitute, a union official says.

The Australian Rail Track Corporation (ARTC) on Tuesday said it was reviewing its schedule to build the Southern Sydney Freight Line, between Macarthur and Sefton, because of several planning issues.

A statement from the ARTC says the re-scheduling is because changes to the RailCorp signalling system cannot be made until late 2010 or early 2011.

The route of the railway line also needs to be redesigned to avoid impact on the Glenfield rubbish tip, ARTC said.

"Each of these adjustments has a potential material impact upon the cost of delivery of the project and therefore the present program of construction is being slowed somewhat, to evaluate the most effective options in moving forward," the statement said.

An ARTC spokesman said the work on the project has been delayed "for the forseeable future".

Construction, Forestry, Mining, Energy Union (CFMEU) assistant state secretary Brian Parker said at least 800 Sydney workers had been affected.

"We've got 800 families who are going to be left destitute right on Christmas," Mr Parker told AAP on Tuesday.

Mr Parker said the workers had been under the impression the work would continue through to July next year.

"It's a complete and utter stuff-up between the state government body, being RailCorp and the federal government body (ARTC).

"There's been no planning whatsoever and some government bureaucrats say 'well, let's stop it' ... not knowing what the issues are for the families of the 800 workers."

A spokesman for RailCorp said it has met all of its obligations in helping ARTC manage the project and they will continue working together.