Up to 50 patrons will be allowed inside pubs, clubs and restaurants from June 1 in a major move out of the Coronavirus crisis by Premier Gladys Berejiklian.
The move is likely to see dozens of local restaurants and pubs re-open next month, with many stood down employees set to be reinstated.
Patrons will not be allowed to stand inside and must be seated.
“This decision has been made with expert health advice and both businesses and patrons will be subject to strict rules and guidelines,” Ms Berejiklian said.
“All customers must be seated and no bookings of more than 10 allowed, in addition to many other conditions which must be met.”
Deputy Premier John Barilaro said it was a “game changer”.
“We’ve opened up the regions and now it’s our happy hour – it’s time to wine and dine,” he said.
Health Minister Brad Hazzard said it was important everyone remained cautious when heading out.
“We will not let this virus beat New South Wales but as we do open up… I also want to make sure all of us understand this virus is still out there. It’s still lurking and we still have to be careful,” he said.
The existing rule of 10 people inside an eatery will remain in place until the end of the month.