Churches will no longer be able to hide their cash from sexual abuse survivors behind a legal loophole in NSW under proposed new laws.
The state government announced on Sunday it will overhaul its civil litigation laws, opening churches trust funds up to to victims of child sex abuse.
It effectively abolishes what's become known as the 'Ellis defence' - arising from a case in 2006 when former altar boy and abuse survivor John Ellis tried to sue the Catholic Church.
The church won the legal battle, successfully arguing it didn't legally exist as its assets were held in a trust that was protected from legal action.
The changes follow recommendations from the royal commission into institutional responses to child sex abuse.
Victoria passed laws to close the legal loophole in May. NSW hopes to introduce them in parliament before the end of 2018.
The Catholic Church in NSW said it has been helping survivors to identify proper defendants and ensuring claims are met "for some time now," but conceded more can be done.
Law firm Maurice Blackburn's abuse law principal Michelle James called for other states to replicate the legislative changes.
"It is wonderful to see the NSW and Victorian governments act on the royal commission's recommendation to remove this unjust legal barrier for victims and we now need to see that repeated across the remainder of the country," Ms James said in a statement.