Premier Dominic Perrottet announced the easing of hospital visiting guidelines as the state reported another 24 COVID-19 deaths and 10,130 infections on Thursday.
The gravely ill, dying, and giving birth will now be able to have visitors as a general rule.
Under restrictions reintroduced at the height of the Omicron wave in December, loved ones of people in those categories had to apply for exemptions to visit.
Many had their requests denied, including a Sydney woman who spent five hours in a hospital car park waiting for an exemption as her mother died alone.
The protocols were intended to strike a "fine balance" between limiting the spread of COVID-19 in hospitals and making sure family support was available to those gravely ill and dying, Mr Perrottet said.
"But ultimately we want to make sure that compassion is the major focus," he told reporters.
The premier previously apologised on behalf of the state for the hurt caused by the tough rules.
The number of daily visitors will remain limited and hospitals will still be able to block visits where necessary for safety.
It comes as the number of people in hospital with the virus dropped by 111 to to 1795.
Some 121 people remain in intensive care, down by 11 from the previous day.
Mr Perrottet also promised to prioritise the resumption of non-urgent elective surgery in Sydney's public hospitals, after the procedures restarted in private hospitals and non-metropolitan public hospitals on Monday.
The state is also on track to ease other restrictions - like indoor mask wearing mandates, and density limits - as planned on February 27, he said.
The premier will agitate for more changes in policy at national cabinet on Thursday, with discussion on including boosters as part of a full COVID-19 vaccination course and the return of cruising on the agenda.
Mr Perrottet refused to be drawn on his position on a three-dose vaccination requirement, saying he'd wait for advice due to be presented by the country's immunisation advisory group to the national cabinet later on Thursday
Health authorities recommend a booster shot for the best protection against the Omicron strain of the virus.
"It's a complicated area in circumstances where different countries have different rules," he said.
"The spirit and the intent of the decisions that we will make will be in line with the Australian Technical Advisory Group on Immunisation advice."
However, he said the government would not move the goal posts for two-dose vaccinated tourists who are due to be welcomed back to Australia in 11 days, after years of international border closures.
"We won't be doing that," he said.
"We cannot live here in a hermit kingdom on the other side of the world.
"We need to rejoin every other country globally and do that in a sensible and measured way."
Half of the eligible population has received a booster shot as of Thursday, and 44.2 per cent of primary school-age children have received their first shot.
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