Taylor Square was named after a convict turned successful businessman called Robert Taylor. But now, the Premier wants it renamed in honour of the retired High Court judge Michael Kirby.

As Kirby Square, it would, according to the Premier, provide a more fitting salute to Sydney's gay and lesbian community and the mardi gras, to which it plays host each year, than the City of Sydney's controversial rainbow pedestrian crossing.

In answer to a question in Parliament from Sydney MP Alex Greenwich about the government's commitment to the gay, lesbian and transgender community, Mr O'Farrell talked about his support for organisations such as ACON in its fight against the spread of HIV.

And after wishing the MPs a ''happy mardi gras'', he addressed the City of Sydney's decision to paint a rainbow pedestrian crossing on Oxford Street, at a reported cost to ratepayers of $110,000.

''Instead perhaps of messing up road safety rules with what is an appropriate acknowledgement of the contribution and frankly the sacrifice and hardship that gay, bisexual, lesbians, transgender and intersex people have gone through,'' he said, ''why not, after all these years rename Taylor Square after a great individual who epitomises just how good that community is - rename it after Michael Kirby''.

Mr Kirby said he would ''bow out'' of the discussion, saying ''these things are for others to decide''. ''It's been known as Taylor Square all my life,'' he said.

The lord mayor, Clover Moore, said Taylor Square was ''an iconic location already''.

''Michael Kirby … has made a significant contribution and I would be very happy to talk with him and the GLBTI community about a way to publicly honour him," she said.

Mr Greenwich said it was important to acknowledge Mr Kirby's continuing contribution to the community.