The NSW government’s decision to refurbish rather than rebuild Sydney’s Olympic stadium has the support of the NRL.

The state government announced on Thursday it won’t proceed with a plan to completely knock down and rebuild ANZ Stadium at Homebush instead committing to an $810 million “refurbishment” into a rectangular venue.

The coalition will push ahead with its proposal to demolish and rebuild the smaller Allianz Stadium at Moore Park at a cost of $730 million.

Australian Rugby League Commission chairman Peter Beattie said while the alteration wasn’t the ideal outcome for the NRL, they would back it.

“The NRL is endorsing the decision made today by the NSW Government,” Mr Beattie said.

“The NRL would have preferred that it was a new stadium … but the fact is the refurbishment to a rectangular stadium – whilst not our preferred position – is one we’ll support.”

The revised deal means Sydney will retain hosting rights of the NRL grand final for the next 25 years – ending speculation the marquee fixture could go to Queensland or another interstate venue.

“I know some people in Queensland would have preferred the grand finals here and I understand that,” Mr Beattie said.

“But we need to get quality stadia. There’s no point Queensland having the best stadia in Australia and NSW are running around in a cow paddock.”

NSW Premier Gladys Berejiklian said the new proposal meant 46,000 fans will still be closer to the action but the government will save $500 million.

“We are a government that does its homework and listens to the public,” she said in a statement.

The revised cost of the new stadiums plan is $1.5 billion.

The backflip comes just weeks after Opposition leader Luke Foley toured the state in a big red bus emblazoned with the slogan “schools and hospitals before stadiums”.

A recent opinion poll suggested more than half of NSW voters opposed the government spending more than $2 billion to demolish and rebuild both ANZ and Allianz stadiums.