The 50-person limit at cafes, restaurants, and churches will be scrapped in NSW with venues instead to follow the one person per four square metres rule.
The new rule, announced by the NSW government on Sunday, will be in place from July 1 and applies to most indoor venues including pubs and workspaces.
It will allow for more people to attend gatherings, but the size of the space will be crucial with one person allowed for every four square metres.
Outdoor cultural and sporting venues with a capacity of up to 40,000 will from July 1 also be allowed to seat 25 per cent of their normal capacity.
The relaxation of restrictions is in line with the national cabinet's decision on Friday to tweak the third stage of easing COVID-19 rules.
It comes as all students at a primary school in southern Sydney have been told to stay at home after a staff member tested positive for COVID-19.
Laguna Street Public School will stop on-site learning until Thursday following the diagnosis, according to the NSW education department.
All school students have been deemed close contacts of the employee and should start self-isolating, a statement from the department said on Saturday night.
A staff member at Rose Bay Public School in Sydney's eastern suburbs was also confirmed to have tested positive for the coronavirus on Friday.
The Rose Bay case was one of four confirmed in the 24-hour reporting period to Friday night, along with a locally-acquired case still under investigation.
It caused the school's closure on Friday, but authorities are investigating whether it is an older infection.
Meanwhile, the locally-acquired case - a man in his twenties - brought an end to the state's streak of having no community-transmitted infections recorded for more than two weeks.
He's not believed to have attended any recent protest or mass gathering, NSW Health says.
There have now been 3120 cases of coronavirus in NSW, with 47 people being treated as of Saturday. No cases are in intensive care.
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