NSW's financial woes aren't as bad as first thought, with official figures revealing last year's state budget deficit was overestimated.

The figures released on Thursday show the 2008-09 budget deficit was $897 million - $440 million below the $1.34 billion that had been forecast in June.

"An extraordinary result that at the height of the global crisis NSW was able to improve its financial position," Treasurer Eric Roozendaal told parliament.

"It has been a tough period but we have seen jobs created and retail spending coming up."

Part of the improvement is attributable to a change in timing of commonwealth grants but this will mean NSW will receive $208 million less this financial year.

An improvement in the NSW housing sector is also responsible for the lower than forecast deficit, with revenue from stamp duty higher than expected.

Stamp duty revenue was $90 million above forecast, with tax receipts overall $144 million higher than projected.

The NSW Business Chamber said that while it often did not welcome an increase in tax revenues, in the current climate it was a result of stronger than expected economic activity.

"NSW has held up better than we all expected," chamber chief executive Stephen Cartwright said.

But the state opposition said a deficit close to $1 billion was no cause for celebration.

Opposition finance spokesman Mike Baird said the $897 million deficit meant NSW was only "limping out of recession".

"Only the incompetent Rees government could get excited about producing a deficit of close to a billion dollars," Mr Baird said.

"If not for commonwealth grants, the position would be even worse."

Mr Roozendaal said latest figures also revealed that NSW recorded a deficit of $15 million for the first three months of the current financial year, compared to a deficit of $656 million ($656 million) at the end of September last year.

The next set of state government financial data will be released in December in the mid-year budget review.