Traffic runs smoothly at new Sydney tunnel after morning peak hour chaos

Traffic is "flowing smoothly" in Sydney's Inner West this afternoon after the city's new major tunnel network faced chaos during the morning peak hour.

The Rozelle interchange was a "car park" at 8am today after drivers were confused by a sign which appeared to indicate a toll in a section of the tunnel that is free.

Drivers were seen trying to switch lanes to take Old Victoria Road at the last minute to avoid the non-existent payment.

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"It's definitely confusing, you can see the traffic, you can see people trying to change over the left lane," one driver said.

The Rozelle interchange links the Iron Cove and Anzac bridges, eliminating the seven sets of traffic lights on Victoria Road.

The tunnel is free and the toll only kicks in if you drive down the M8.

Images showed traffic slowed to a crawl, with only one car at times able to move during a green-light phase.

This afternoon, Transport for NSW secretary Howard Collins said traffic was "flowing very smoothly" despite the teething issues in the morning.

"People were creatures of habit, they were jammed on Victoria Road when they could have taken a smooth ride through the tunnel onto the Anzac Bridge," he told 2GB's Chris O'Keefe.

"I think there is confusion as there's that toll message on one of the signs next to the M4 and the M8 people think, 'It is a tunnel, oh, it must be tolled'.

"This piece of the Rozelle interchange we've always wanted to make free because we want people to come off Victoria Road and use the tunnel."

Collins urged drivers this afternoon on their way out of the city to take the sign saying "Tunnel" and "Drummoyne" to score a free, faster trip.