SMOKING will be banned statewide in playgrounds, sports grounds, swimming pools, public transport stops and the entrances to public buildings from January.
In 2015, the ban will be extended to all commercial outdoor dining areas.
Port Macquarie MP Leslie Williams said the 5200 deaths and 44,000 hospitalisations related to smoking each year in NSW warranted the "drastic measures".
"I am extremely pleased that people will now be able to go about their business in public places without inhaling harmful, second-hand smoke," Mrs William said.
"In economic terms, it costs NSW around $8 billion a year, which is a cost we simply cannot allow to continue."
The Port Macquarie-Hastings Council began implementing its smoke-free outdoor areas approach in February and will continue to roll out bans in public places as funding becomes available.
Similar to the state, the council's target areas include playgrounds, council car parks, beaches, alfresco dining areas, playing fields and sports facilities, at outdoor events, bushland reserves, bus stops and taxi ranks.
The council called on the state government to back reforms earlier this year.
Community and Cultural Development director Lesley Atkinson welcomed the new legislation.
"Our council has been proactive in lobbying to the state government on this issue, as it will offer a simpler and more consistent approach for everyone, including our council's," Ms Atkinson said.
"The legislation further supports council's existing Outdoor Areas Smoking Policy which we know clearly aligns with our community's expectations."
Almost $5000 from the Cancer Council NSW has already funded the installation of cigarette litter bins and signs at four playgrounds throughout the region.