NSW may call on the army to help drought-stricken farmers if the situation gets worse, the premier says.
The state government on Wednesday declared that 100 per cent of the state was impacted by drought, on the back of a drier-than-expected start to winter.
The latest Department of Primary Industries data shows almost 22 per cent of NSW is suffering intense drought, 40 per cent is in drought and nearly 38 per cent is drought-affected.
State governments are able to request military assistance, to help with moving feed and water and other resources.
Premier Gladys Berejiklian said she is keeping all options open.
"When things are this bad, you have to have all your options on the table," she told Channel Seven on Thursday.
"We're not at that stage yet, but if we needed to, we wouldn't hesitate to call for action."
Ms Berejiklian said the state government was also looking at other possibilities, including opening up NSW's national parks for grazing and feed and allowing access to water reserves.
"We are looking at all the options if we need them," she said.
Less than 10 millimetres was recorded in the western, northwest and central areas of NSW over the past month and drier-than-normal conditions are forecast for the next three months across the majority of the state.
Cattle and sheep farmer Robert Lee says climate change is behind the drought crisis.
Mr Lee has been farming near Molong in the state's central west for 32 years and is a member of Farmers for Climate Action.
He wants the federal and state governments to come up with a plan to help farmers adjust to a warming environment.
The federal government has announced $12,000 grants for each affected farming family while the NSW government has doubled its funding commitments with a total of $1 billion now available.