The raft of changes proposed by the state government will make it easier for venues to host events and more difficult for noise complaints to be used to shut them down.
Venues that host live music will be allowed to trade two hours longer under streamlined licensing laws as the government looks to save existing music and cultural venues and encourage new ones to open in order to "bring back vibrancy".
Arts Minister John Graham said more relaxed laws for outdoor dining and events would have punters dancing in the streets.
"We believe there's a better deal here, both for neighbours who need a good night's sleep ... but also to keep musicians on their stages," he told reporters.
"It's (currently) a confusing patchwork of multiple laws and several regulators but we've changed that with these laws to make real improvements in the noise and sound framework."
John Graham wants to "keep musicians on their stages" with new live music laws.
Venues will be able to apply for alfresco licences through a faster "light-touch" process, while councils will be supported in hosting community and creative groups putting on pop-up events and festivals, including those involving street closures.
Proposed changes to several laws governing live music, liquor and planning will be put to parliament, and $58 million has been budgeted in 2023/24 to implement the policies.
The state government is seeking co-funding from the hospitality and entertainment sectors.
Premier Chris Minns said it was important Sydney did not shut down "as if we were a country town".
At least five individual noise complaints will need to be registered with the office of liquor and gaming before a venue can be asked to close, while Liquor & Gaming NSW will take the lead in assessing any issues.
"It's another step in removing the nanny-state restrictions (and) the red tape that has really stifled the vibrancy, the life and the fun out of Sydney for the last 10 years," Mr Minns said.
"Order of occupancy" will be made a central consideration in disturbance complaints, prioritising long-running venues over new residents in gentrified inner-city suburbs.
Changes by the NSW government will make it harder for noise complaints to shut down live events.
A bill will also be introduced to make the position of 24-Hour Economy Commissioner a statutory appointment, with an expanded remit beyond Sydney to include Newcastle, Wollongong and the Central Coast.
Matt Levinson from think tank Committee for Sydney said the changes were sensible and would help the NSW capital take its place as one of the world's top nightlife hubs.
"These changes will be music to Sydney's ears," he said.
Business Western Sydney executive director David Borger said it was good the NSW government was turning "a deaf ear to single noise complaints".
"It's time to end the silence in western Sydney and bring back the beats ... we've got twice the population and half the fun," he said.
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