New South Wales Waratahs are edging towards a deal that would seem them play all home matches at Allianz Stadium in a potentially devastating blow to rugby in western Sydney.

According to Fairfax Media, the Waratahs are close to signing a deal with the SCG Trust - the owners of Allianz Stadium - that would see all seven of their home games played at the Moore Park precinct from next season.

The Waratahs were reportedly close to extending their current deal with ANZ Stadium - which sees them play two regular season games at the venue - before Christmas in a move that would have generated around $2 million in revenue. But the SCG Trust then threatened to boot the Waratahs from Allianz Stadium altogether, forcing Waratahs officials back to the discussion table in Sydney's east. It is believed NSW officials have since negotiated a tidy increase on their current deal, which would see the Waratahs play just one extra game at Moore Park under Super Rugby's expanded competition from 2016.

The deal would be a major blow to rugby in Sydney's western suburbs, and scotch any good will from their decision to play the Chiefs in a trial match at Campbelltown Stadium on February 6.

Rugby is fighting a losing battle in Australia's fastest growing area with rugby league and soccer already entrenched, and the AFL improving its reach through expansion club Greater Western Sydney.

But all may not be lost just yet with an ANZ Stadium spokesperson telling Fairfax discussions with the Waratahs had been very positive. "They'd been made an offer that substantially increases the return to rugby and we are waiting to hear back from them," the spokesman said.

The Waratahs will face the Rebels and Crusaders at ANZ Stadium this season, the latter of which will be a replay of last year's Super Rugby final. A crowd of almost 63,000 watched the Waratahs claim their maiden title at the Homebush venue. According to the Fairfax report, the SCG Trust deal would still allow the Waratahs to take any future finals to ANZ Stadium.