Preschool will be free for all NSW families for the next six months, Premier Gladys Berejiklian announced Thursday morning.
Ms Berejiklian said the $50 million plan was aimed at helping families struggling financially due to the coronavirus pandemic.
She also thanked the state's early learning centres for working hard during what had been a "challenging time".
"I'm pleased to announce the New South Wales government will be providing free preschool for parents over the next six months," she said.
"That will be at a cost of $50 million but we're pleased to do this because we know that household budgets are under pressure, families are under pressure."
It is hoped the announcement will help boost enrolments in preschools at a time when the sector has reported a decline in student numbers.
In addition to the preschool funding announcement, Ms Berejiklian said the State Government would also provide financial assistance to local council run childcare centres, in addition to the Federal Government's funding announced last week.
"That means childcare centres run by local governments don't have to worry about the additional cost of keeping staff on and providing the vital services," she said. "That will cost us $82 million."
NSW Education Minister Sarah Mitchell said the sector had been "hit quite hard' during the COVID-19 crisis.
"This is all about making sure this is cost-effective for parents," she said.
"We know how crucial early childhood education is."