NSW is easing a raft of restrictions with its "four square metre" social distancing rule changing to two square metres, while stadiums and outdoor theatres will be allowed to operate at 100 per cent capacity.
The state on Wednesday recorded its 25th consecutive day without a local COVID-19 case, while six cases were uncovered in hotel quarantine.
The government agreed to lift a tranche of restrictions from Monday, including changing the social distancing recommendation of one person per four square metres to one person per two square metres.
Gyms and nightclubs are the only exceptions to this changed rule.
There will be no caps on patron numbers at hospitality venues, nor at wedding and funerals.
Standing in outdoor hospitality venues will be permitted and up to 50 people can be on a dancefloor at any one time.
Controlled events will be permitted to have up to 5000 people, while stadiums and outdoor theatres can operate at 100 per cent capacity.
Indoor stadiums and theatres can operate at 75 per cent capacity, while choirs of up to 50 people will be permitted to perform indoors.
Premier Gladys Berejiklian says some recommendations - including social distancing, seeking testing when ill, using hand sanitiser and wearing masks in enclosed spaces - won't change.
"We're deeply grateful that since the beginning of the pandemic, the community has taken our advice, has really led the way, has really led the way throughout the nation and we want that to continue," Ms Berejiklian told reporters.
NSW Health is warning there still may be transmission among people who have unrecognised infections with mild or no symptoms, but Chief Health Officer Kerry Chant saying community elimination in NSW is now likely.
But Ms Berejiklian warned that if a COVID-19 outbreak occurred in the coming months in NSW, a rapid reinstatement of restrictions was inevitable.
It comes after retailers called for a further easing of COVID-19 restrictions to encourage people to get into the spirit of Christmas shopping.
Business NSW said retailers need to be given a chance to capitalise on Christmas spending with a relaxation of restrictions on their premises.
"It goes without saying what a difficult year it has been for the retail sector, and here is an opportunity to provide them with some relief, so long as they operate in a COVID-safe way," Business NSW chief executive Nola Watson said.