The incident has prompted a temporary halt to use of the non-lethal option while a review is undertaken.
Krista Kach died in hospital on Thursday after barricading herself in her unit after allegedly threatening people and officers with an axe.
After a nine-hour standoff, police gained access to the unit and deployed a Taser, as well as bean bag rounds, while attempting an arrest.
The 47-year-old was able to walk to a nearby ambulance and was taken to John Hunter Hospital, but died after a bean bag round entered her body and hit her heart.
Acting Commissioner David Hudson said police would temporarily suspend use of the rounds, which had been deployed 15 times this year without incident.
"That suspension will remain in place until we do a full review of the capability and see if it is worth continuing," he said.
"It is a less than lethal option or so defined and if we remove it permanently from our capability, we will only be left with Tasers between a baton and a firearm and that's a concern to us.
"But we need to make sure that when we deploy a less-than-lethal option, it has to be less than lethal."
The police review will investigate if any particular batch of rounds were flawed and consider what alternative methods to the rounds are available.
Ms Kach's grieving family condemned the police response on Monday, saying she was distressed after being told she would be evicted from her unit.
"What happened on Thursday was a disturbing and heartbreaking response by the police to a vulnerable person that had been told that she would soon be homeless," the family said in a statement.
Ms Kach's death is the second fatal incident involving NSW police using a stun gun in recent months.
Clare Nowland, 95, died after being tasered at a Cooma nursing home in May.
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