The Department of Primary Industries (DPI) said that 61 percent of NSW is either in drought or in intense drought, while 39 percent is drought affected.
Farmers in Australia's most populous state have been given enhanced authority to shoot kangaroos because of the drought.
The combineddrought indicator - which takes in rainfall, soil water, plant growth and long term climate data - shows no part of NSW is recovering despite some recent rain.
Residents living and working in Australia's biggest city aren't immune to the worsening crisis either, with a staggering 90.1 per cent of Greater Sydney now in "intense drought".
What caused the drought: Drought is not uncommon in Australia, but this year the winter in eastern and southern Australia was drier than expected and did not provide much needed water for farm lands, leaving farmers battling crop failure, water shortages and very little food for their animals. Young farmers under 35 are especially vulnerable to stress and negative effects of droughts, researchers at the University of Newcastle said in a recent study.
The amount includes the $576 million in emergency relief funding provided by the state and federal governments.
The money is meant to assist farmers who are struggling with failing crops, water shortages and the cost of feeding animals.
Australia has long dealt with harsh, dry conditions, especially inland, away from coastal areas popular with tourists.
Farmers in NSW were spending up to A$10,000 per truckload of hay to feed their animals, he said.
The conditions in New South Wales state this year have been the driest and most widespread since 1965.
"They are shooting their stock because they don't want them to suffer".
Earlier this week, Prime Minister Malcolm Turnbull announced $12,000 grants for farming families. Nearly 20,000 eligible people are yet to apply for the grant.
Though Australia has long suffered from spells of drought, other parts of the world are now experiencing extreme weather which experts say is evidence of the Earth's changing climate.
"Now we are the land of droughts and flooding rains, we recognise that", he said.