Exclusion zones and other safeguards to protect homes and high quality farmland from coal seam gas (CSG) projects across about 5.3 million hectares have been finalised.
NSW Deputy Premier Andrew Stoner says the reforms strike the right balance for communities and industry.
"Today marks a significant milestone in this government's commitment to balance the energy needs of the state and the need to support our vital agricultural industry," he said in a statement on Tuesday.
CSG exclusion zones were in force for an estimated 95 per cent of dwellings covered by current petroleum licences and tough regulations were also in place for NSW's most valuable agricultural land, Mr Stoner said.
He said the government had delivered the strictest regulations around CSG projects in Australia.
CSG exclusion zones now applied to 2.7 million hectares in NSW, Mr Stoner said.
In addition, about 2.8 million hectares of valuable farming land was safeguarded by ensuring the impacts on land and water or resource proposals were considered upfront through the independent scientific Gateway process, he said.
Protection of "critical industry clusters" includes 60,000 hectares of vineyards and horse studs in the Upper Hunter region.
Planning and Infrastructure Minister Brad Hazzard said in October that CSG exclusion zones with a 2-kilometre buffer had been set up across existing residential zones and the northwest and southwest growth centres of Sydney, where new CSG activity is prohibited.
An additional five future growth residential areas have since been added in the Gosford and Great Lakes council areas, he said.
The Nature Conservation Council of NSW said the safeguards were a "common sense" victory for those concerned about CSG projects in urban areas but "key water resources and sensitive environmental areas" remained at risk.
"Drinking water catchments are still not protected, neither are important natural assets like the Pilliga Forest, which is set to be carved up and polluted by gas development," campaigns director Kate Smolski said in a statement.
The "independent scientific gateway" process, under which a panel conducts a preliminary review of an application before a full proposal is submitted, is pointless, she added.
"The panel has no power to refuse. The gateway is permanently propped open, leaving productive agricultural land exposed to mining and gas development."