Claims that the Norma Parker Centre in Parramatta is being refurbished to house pedophiles have been dismissed by the office of the Attorney-General and Minister for Justice, John Hatzistergos.
A spokesman for Mr Hatzistergos rejected claims that male sex offenders would be held at the site of the former Parramatta Girls' Home.
"No male sex offenders will be accommodated in the Norma Parker Centre. To suggest otherwise is false," he said.
"The future of the Norma Parker Centre will be considered as part of a wider review into the periodic detention scheme, but it will not involve sex offenders or any other risk to the community.
"Sex offenders will continue to be held in secure custody centres where they belong."
The Fleet Street location operated as a child welfare institution, the Parramatta Girls' Home, from 1887 to 1986.
It then became the Norma Parker Centre and until February was used as a periodic detention centre for females.
A former inmate of the Parramatta Girls' Home, Bonney Djuric, said the Commissioner of Corrective Services, Ron Woodham, told her of new plans for the site last month.
"He [Mr Woodham] said that it was being refitted for male prisoners in four weeks so hurry [and apply] if you want an open day," Ms Djuric said.
"I then overheard a conversation saying that the male sex offenders were going in there the people who deal with those sex offenders were talking about it."
Ms Djuric is the founder of Parragirls, a support network and contact register set up for former inmates.
The group distributed flyers to residents last week expressing concern the site of the former girls' home would be used to house male sex offenders.
Ms Djuric was sceptical when told of Mr Hatzistergos's denial on Thursday.
"The [Corrective Services] department has a big history in keeping things hidden. How would we know?" Ms Djuric said.
"The question still remains: Why should the centre still be used as a prison?"
The harsh and oppressive history of the Parramatta Girls' Home has been revealed only in recent years.
Former inmates have come forward to reveal their stories of sexual and physical abuse, brutal punishment methods and degradation at the hands of prison officers.
Ms Djuric and many other women who spent time inside the institution want the Norma Parker Centre to be turned into a place for healing.
The centre is within the grounds of the Parramatta Female Factory Precinct, which has a long association with women - starting with the first female convicts who were incarcerated there.
Housing sex offenders would make a mockery of the women who were abused, Ms Djuric said.
"We'd like to establish a national centre for forgotten Australians, people who experienced institutional out-of-home care as children, the stolen generations and welfare kids.
"And also a learning centre for disadvantaged Aboriginal kids and a conference centre."