Consumers will be able to do more proof-of-identity transactions with government agencies online, in a NSW pilot program.
The digital ID reforms - part of a strategy since 2015 - aim to give people in NSW the option to use digital credentials, instead of physical documents, for various state licences, certifications and qualifications.
A key initiative was the rollout in 2019 of the digital driver's licence.
Digital Government Minister Victor Dominello says pilots this month will make it possible to renew working with children checks and do proof-of-age checks for online alcohol purchases online via Service NSW.
NSW residents had embraced digital driver licences and Mr Dominello said the NSW Digital Identity "would take things to the next level".
Strong cyber security was "at the heart" of the overhaul and its pilot programs, Mr Dominello said on Wednesday.
A recent spate of cyber attacks on Australia-based companies, including on health insurer Medibank and telco Optus, have impacted millions of Australians.
"Recent cyber breaches have underlined the need to keep the control of our private information in the hands of the customer and stop the need for the continual oversharing of our personal details," Mr Dominello said.
"Customers will be able to store their encrypted personal information securely on their own device meaning it will not be held centrally by government or a private entity.
"Customers can be confident that no biometric or photo data will be stored once successfully verified."
The tech would be stress tested through the pilot phase, including fraud and security risk assessments, he said.