In 1899, workers in Bridge Street unearthed a corner of James Bloodworth's original building and discovered the copper foundation plaque that Governor Phillip had laid when construction began in 1788.  This caused tremendous public interest at the time, but no further excavations were undertaken for another 84 years.

        In 1982, the NSW Government called for proposals to develop the by now vacant Site, and the winning design was announced in September of that year. The design envisaged the erection of a new 38 story office building to merge with Sydney's modern soaring skyline; however, the Government responded to calls from concerned academics and historical societies by commissioning an archaeological investigation of the Site before construction of the skyscraper destroyed any historical remains forever.

        Excavations began in 1983, under Helen Proudfoot and Anne Bickford, and soon revealed the extent of the buried foundations.  At a public rally in August 1983, the Friends of the First Government House Site was formed, under the chairmanship of Nell Sansom OAM, to press for the preservation of the Site and to raise public awareness of its heritage - one of the few tangible links to the 1788 foundation of modern Australia. 

       The Site was immediately placed on the Register of the National Estate by special gazettal, and all building development was halted.  Premier Neville Wran then announced that a conservation plan was to be prepared for the Site, which would be followed by a national competition for a new skyscraper design that would preserve the foundations for future generations.    The Friends urged that any development plan should also include the construction of a commemorative First Government House Museum on the Site as an integral part of the design.  On May 15th 1984, the 196th anniversary of Governor Phillip's laying of the foundation stone of the First Government House, the Friends gave the first of what was to become their traditional series of annual Foundation Day Lectures.   

      After further excavation and conservation work on the Site, Deputy Premier Wal Murray inaugurated the architectural competition in 1988.  The winners, architects Denton Corker Marshall, finished construction of the 64 story Governor Phillip Tower  in February 1994, while the associated Museum was opened on May 20th 1995, under the administration of the Historic Houses Trust of NSW.  

      In a controversial move, the Trust, without consultation, decided to down-grade the unique heritage of the Site by changing the name of the First Government House Museum, to the Museum of Sydney (on the Site of  First Government House); a title often simply abbreviated to MOS.   It was a decision that outraged and polarised heritage groups; as has The Trust's subsequent refusal to fly the Australian flag over the Site, or indeed to celebrate Australia Day in any meaningful manner whatsoever.  The  debate over the divisive, politically-correct ideology which lies behind the Trust's actions still continues.