The governor-general issued the declaration after a meeting with the prime minister in Canberra on Friday night.
The gazette notice for the declaration, which came into effect at 10.25pm, said it would last for three months and only covered NSW.
It will allow the federal government to access stockpiled resources and remove red tape in terms of business and welfare support.
The declaration comes as assistance is extended to a further 12 local government areas in NSW following severe flooding and storms throughout March.
The support will be provided through the jointly funded Commonwealth-State Disaster Recovery Funding Arrangements as some regions remain in the emergency stage despite waters receding in other parts of the state.
NSW Emergency Services and Flood Recovery Minister Steph Cooke said the support would extend to thousands of households, small businesses, primary producers, non-for-profits and local councils.
"The immense scale of the flooding is unprecedented and we are working closely with the Commonwealth to put equally unprecedented resources into the significant clean-up and long-term recovery effort," Ms Cooke said.
The LGAs include Cessnock; Cumberland; Dungog Shire; Goulburn-Mulwaree; Lithgow; Maitland; The mid-western region in the Central Tablelands; Muswellbrook Shire; Queanbeyan-Palerang; Singleton Shire; Snowy-Monaro; and the Upper Hunter Shire.
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