Premier Gladys Berejiklian has announced that restaurants, cafes, pubs and clubs will be able to seat up to 50 patrons from June 1st.
The news comes a week after restrictions were eased, allowing for 10 people to gather outdoors.
However, venues will not be able to take bookings of more than 10 people, and all patrons must be seated.
The increase in patronage aligns with the easing of regional travel restrictions across the state and the opening of museums, galleries and libraries from June 1.
It comes as NSW recorded its 50th COVID-19 death after an 80-year-old woman died in Concord Hospital.
Her death brings the national toll to 101.
NSW chief health officer Dr Kerry Chant said the woman became infected after being exposed to the virus in an outpatient clinical setting.
Dr Chant says there’s no evidence of further transmission or ongoing risk at Concord Hospital.
The state on Friday recorded three new COVID-19 cases from more than 8600 tests.