The light show, described by City of Sydney officials as a "world-first", will run through an app on iPhone and Android smartphones that will illuminate the screens with colour at scheduled intervals leading up to midnight.
The city is hoping to attract more than one million people to the harbour foreshore to witness the fireworks, and organisers want the crowds to hold their phones aloft to form a synchronised wave of colour.
"In a city of great diversity we come together at New Year's Eve to embrace the future and celebrate all that we are and the potential that tomorrow holds," Minogue, the event's creative ambassador, said in a video message for Thursday's official launch.
Minogue said the theme for the 2012 celebrations, Embrace, was about "acceptance, tolerance, fun and above all love".
"This year I want everyone to embrace during the 9pm family fireworks and the midnight fireworks," she said.
"Whether it's embracing new ideas, change and opportunities, or just giving a big hug to your family and friends, it's something everyone can get involved in."
App users will also be able to submit a word to be projected onto the pylons of the Harbour Bridge, which is typically the centrepiece of an evening's pyrotechnics.
The Sydney fireworks kick off global New Year's celebrations and are seen by billions of people worldwide.
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