Australia [Images] is facing a tug of war over the site of the Australian Open [Images] after politicians in Sydney announced plans to build a multi-million dollar facility to attract the tournament, local media reported on Saturday.

The Australian Open, which is the year's first grand slam, is traditionally held in January each year in the Victorian state capital of Melbourne, which has the rights to host it until 2016.

The New South Wales state government, however, is keen to build a tennis arena in Glebe, which is close to the city centre, to try to win the tournament after the contract expires, local newspapers reported.

"I think the Australian Open is clearly a terrific annual event and it's something that any events company would be mad not to have on their radar," Events NSW's Geoff Parmenter told reporters.

"That said, it's locked into Melbourne until at least 2016.

"It's very early days. And while we've had some discussions with Tennis Australia, there's nothing formal (arranged)."

However, John Brumby, the leader of the ruling party in Victoria, said they would fight to hold on to the event.

"It's a great stadium, the players love Melbourne, we've got the best sports precinct in the world and I don't think we need to take too seriously the threats that are coming from Sydney," he was quoted as saying by Australian Associated Press.

"We're working with (Tennis Australia) to make some improvements and we'll be making some announcements about that next year." Next year's Australian Open runs from Jan. 19-Feb. 1.

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