From Thursday, Opal card readers will be switched off at train and metro stations every weekday between 3pm and 7pm after members of the Rail, Tram and Bus Union (RTBU) voted in favour last week.
Transport Minister David Elliott said the government, along with Sydney Trains, had made the decision to sue the union in the Federal Court over the action, and seek damages.
"I believe the RTBU are recklessly putting the lives of our communities in danger," Mr Elliott said.
The buttons which shut off Opal readers are designed to be operated by qualified staff during an emergency, meaning the industrial action could be allegedly unprotected, Mr Elliott said.
"My strong appeal to the RTBU is to set aside this action," he added.
"You are only endangering the lives of commuters and you're only denying the taxpayers of NSW lawful revenues."
Mr Elliott, who came close to reaching an agreement with rail unions earlier this year, said the financial burden could be large for the RTBU if they lose in court.
"This isn't a decision that we've taken lightly," he said.
The union warned members last week the government could take them to court.
It's a waste of taxpayer money and further proves the government is more interested in fighting the union than reaching an agreement, RTBU NSW secretary Alex Claassens said on Tuesday.
"Turning off the Opal machines and providing commuters with free travel is the kind of protected industrial action we want to take, because we know the only other options available to us do unfortunately tend to result in disruption to commuters," Mr Claassens said.
But the action is not necessarily a saving for commuters.
Rail passengers could be overcharged if they tap on for a journey and can't tap off after the machines are shut down at 3pm.
Commuters who don't tap off are charged a maximum fee, up to $16.80, and would have to contact the transport department for refunds.
The government is trying to minimise the impact on commuters, Sydney Trains CEO Matthew Longland says.
"But we want to be really clear there will be impacts from this industrial action," he said.
Premier Dominic Perrottet accused the rail union of toying with public funds.
"Let's call this for what it is - this is the union movement disrupting the citizens of NSW for political purposes," Mr Perrottet said Tuesday.
The union and government are locked in a protracted dispute over a new enterprise agreement, and are also at loggerheads over union-sought modifications to a Korean-built fleet of intercity trains, in storage since 2019.
The union argues the trains are not safe to operate in NSW yet while the government insists they are.
Mr Claassens rubbished Mr Elliott's suggestion that turning off Opal readers was "endangering the lives of commuters".
"Suggesting that pushing a button to turn an Opal machine off is unsafe is absurd and a bit rich from a government that is insisting on putting trains that risk people's lives on our tracks," he said.
Labor frontbencher Rose Jackson wants the issue resolved before the election.
"If it's not resolved by March ... that is an unbelievably bad indictment on the NSW government's negotiating skills," she said.
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