From Tuesday 1 December, a 2-square-metre rule will apply indoors to hospitality venues up to 200 square metres in size.
New South Wales Premier Gladys Berejiklian announced the decision to further ease restrictions ahead of the festive season.
“I hope these changes provide a boost to the hospitality industry and give people certainty in how they can celebrate safely with family, friends and colleagues over the Christmas and New Year period,” she said.
“Given we have gone a certain number of days without community transmission, it does reduce our concern in that regard.
“[But] my strong message to the people of New South Wales is please let us not let our guard down. We have come too far to let complacency get the better of us.”
Deputy Premier John Barilaro said the increased capacity at smaller hospitality venues would make a big difference to cafés and small restaurants across the state.
“We won’t let this be the COVID that stole Christmas,” he said. “An increase for gatherings at home and a return of the 2m2 rule for smaller hospitality venues, I hope, will be welcome news across the state. We want the people of NSW to have a proper festive season, they deserve it.”
A 2-square-metre rule has applied to outdoor dining areas operated by venues with a COVID-19 Safety Plan since 16 October.
Venues over 200-square-metres in size will need to adhere to the 4-square-metre rule indoors and all venues are capped at a maximum capacity of 300 people.
From Monday 23 November, it is mandatory for venues to use electronic entry recording.