Mr Keating on Sunday threw his support behind NSW Opposition Leader Luke Foley's pledge to have the island, known traditionally as Me-Mel, returned to its original owners the Wangal people.

"Me-Mel was Aboriginal for the pupil of the eye and Goat Island was the centre of the ring of headlands [on Sydney harbour]," Mr Keating said. "This is more than a historic opportunity to rewrite a chapter of our history.

"This should belong to the Aboriginal community of NSW."

Mr Keating said returning the island to the Aboriginal community would play an important in the development of the Sydney headlands, including the work at Barangaroo and Dulwich Point.

Goat Island was once the home of important Aboriginal elder Bennelong and his wife Barangaroo.

NSW Aboriginal Land Council chairman Craig Cromelin said if the island was returned to the Aboriginal community the council would be guided by a community land and business plan.

"Our business plan prioritises health and wellbeing and cultural renaissance," he said.

"It's about promoting, preserving and protecting our culture and we feel to return Me-Mel or Goat Island as it's more commonly known today, would allow us to maintain what's already here and use its unique environmental values but also add a cultural aspect as well."

He said it was too soon to say whether a fee would be introduced to visit the island but Mr Cromelin said the Aboriginal people wanted more people to visit the island to learn about the culture of native tribes.

Mr Foley said he hoped Premier Mike Baird and the Coalition would support the proposal, but no discussions had taken place.