A public meeting on the latest redevelopment plan for the Block in Redfern had to be shut down after 30 minutes amid angry protests.
Around 300 people packed into the Redfern Community Centre for the first public consultation.
Several members of the Aboriginal community voiced their unhappiness with the proposal for a 16-storey building to accommodate more than 500 students.
"Our generation has been displaced," one young woman shouted from the back of the hall.
The Chair of the Aboriginal Housing Company Alisi Tutuila revealed that the plan was to lease part of the site to the private student accommodation provider Atira for 99 years.
She told the meeting the rent would be paid upfront, allowing 62 affordable homes for Aboriginal people to be built with "no financial burden, no debt, no handing over of debt or legacy to the next generation".
Ms Tutuila said it would enable the affordable housing to be built at the same time as the rest of the development.
"Here is a solution that we are sharing with you. We're no longer striving for this. We're at a point where we can confidently say we're ready to deliver the affordable housing."
Among those in the audience was Lyall Munro, the sole surviving member of the group of eight who travelled to Canberra in the 1970s, returning with a grant of $530,000 that allowed the Aboriginal Housing Company to buy its first houses in Redfern.
"Where here has it been mentioned about the Aboriginal homes, about the dreams of the founders of this place?" he asked.
"It's not just Martin Luther King who had a dream, there's Aboriginal people, black Australians who had a dream and that dream's been thwarted and it's sad."
The meeting was due to run for 90 minutes but was brought to an abrupt end as speakers were shouted down and heckled from the floor.
At one point, a lone female protester carrying a banner reading "Battle for the Block round 2" tried to enter the meeting.
She was bundled out by a woman who had been sitting in the front row.
Supporters later claimed the protester had been assaulted.
Speaking afterwards, Ms Tutuila said she was surprised at the way the meeting ended.
"It was disappointing that it had to be shut down due to a minority group of people who hindered an opportunity for other community members to hear more about the program," she said.
The Chief Executive of the Metropolitan Local Aboriginal Land Council, Nathan Moran, was among those watching proceedings.
"Given that this is the only time the community's had a chance to talk about this project or hear about it with some factual information, it was natural that we would have that response and reaction," he said afterwards.
"Originally the place was Aboriginal affordable housing for a community and now we're talking about commercial developments for the benefit of non-Aboriginal students."
Altira is one of the country's largest providers of student accommodation.
Its website says the company was formed as a partnership between investment group Goldman Sachs and Blue Sky Alternative Investments with a goal to acquire and operate accommodation for 10,000 students around Australia.