NSW Premier Gladys Berejiklian has announced mandatory masks, including on public transport, will be scrapped.
"I'm pleased to announce the New South Wales government will be easing restrictions," she told reporters on Wednesday.
The significant move comes among a raft of Covid-19 restriction changes for the state, including the allowance of dancing once again in hospitality venues.
All venues will also move to one patron per two square metres, with all venues allowed at least 25 customers.
Residents will also be allowed as many guests in their homes as they wish.
Weddings and funerals will no longer have any capacity caps.
The changes will come into effect from Monday.
Premier's warning to residents
While the state's suppression of the virus in recent months has given health authorities confidence to advise such a move, Ms Berejiklian warned residents to remain cautious.
"Can I stress the following, these easing of restrictions will only work if all of us stay Covid-safe," she said.
"It means good social distancing, most importantly, it means registering QR codes wherever we go. That is the key to our success.
"If there is an outbreak and we can't identify all the people in a particular venue, we will be having to go backwards again and I don't want to see that happen."
She advised people to wear face masks during peak times on transport despite the lifting of the mandate.
The state appears to have snuffed out any potential spread of the virus after a hotel quarantine security guard contracted Covid-19 earlier this month at the Sofitel hotel in Sydney's CBD.
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