The march is due to take place on Saturday afternoon ahead of the official Mardi Gras, which has been moved to the Sydney Cricket Ground due to COVID-19.

Activist group Pride In Protest is among those organising the community march which plans to take the route of the original 1978 march down Oxford Street to Hyde Park.

Pride In Protest spokesman Toby Walmsley said he was told by NSW Police they intend to block the event in court, citing COVID-19 health restrictions, but he intends to march anyway.

The current limit on political gatherings is 500 and Saturday's event has so far had 900 people RSVP.

"Despite NSW seeing zero community transmissions in the past 44 days ... arbitrary limits on protests remain," Mr Walmsely told AAP on Tuesday.

It's estimated that about 10,000 people will attend the ticketed Mardi Gras parade at the SCG.

Mr Walmsely said the march down Oxford Street had been organised because the SCG event didn't represent what Mardi Gras should be about.

"The SCG event is a paid event and we believe the essence of Mardi Gras is political and about fighting for our rights today," he said.

"We don't believe the SCG event is in the true spirit of Mardi Gras and that's why we called our own event."

NSW Greens MP Jenny Leong said the police could work with the community organisers to make sure the event went ahead in a COVID-safe way instead of shutting it down.

"Historically there is a conflict that the NSW police have, given they were the perpetrators of aggression and violence towards the LGBQI community back in the original Mardi Gras of 1978," she said.

She urged Health Minister Brad Hazzard to help resolve the impasse by increasing the allowed number of protesters to the 3000 limit that existed in December.

NSW Police said in a statement they would "continue to hold discussions with organisers in an attempt to ensure compliance with current health orders and the safety of all persons".

Australian Associated Press