NSW Premier Dominic Perrottet has revealed he wore a Nazi uniform to his 21st birthday party, saying the costume choice was a grave mistake driven by youthful naivety.
"I'm deeply ashamed of what I did," he told reporters on Thursday.
"I'm truly sorry for the hurt and the pain this will cause right across our state and particularly to members of the Jewish community, Holocaust survivors, veterans and their families."
The admission came after a cabinet colleague on Tuesday approached the premier. He declined to name the colleague.
Repeatedly pausing as he answered journalists' questions, the 40-year-old Liberal leader denied he was anti-Semitic, adding the birthday party's theme was "uniforms".
Mr Perrottet said he only wore the rented costume once and did not recall any other offensive costumes being worn at the event.
He realised what he had done was wrong the next day when his parents, who were at the party, spoke to him about the costume.
"At that age in my life, I just did not understand the gravity of what that uniform meant," he said.
"It was just a naive thing to do."
The incident occurred in 2003, two years before Prince Harry was infamously photographed in a Nazi outfit that included a swastika armband.
Mr Perrottet joined the NSW Liberal Party a year earlier.
He now stands 10 weeks from his first election as premier trying to lift the Liberals and Nationals to a fourth successive victory.
Before his self-inflicted damage, his government had already been weakened by the retirements of a dozen colleagues and his party's internal conflict over the selection of female candidates.
Mr Perrottet denied Thursday's admission was prompted by threats to release a photo and said he wasn't aware an image existed.
It comes after an anonymous Twitter account on January 5 posted claims of the existence of a "seriously damaging photo" related to the NSW Liberal Party.
NSW Treasurer Matt Kean said he supported the premier.
"This is a reminder to all of us about the atrocities that occurred and the need for us all to recommit ourselves to ensuring that nothing like that ever happens again," he said.
The NSW Jewish Board of Deputies said the premier had personally conveyed his "deep and sincere regret about his poor choice of costume as a young man" in a conversation shortly before Thursday's press conference.
Nazi symbolism was not to be taken lightly and dressing as a Nazi is not a joke, which the premier had acknowledged, they said.
"This incident, no matter how old, is a reminder of the need to continually educate all Australians - and particularly our youth - about the abhorrent nature of the Nazi regime and the evil perpetrated in service of the Nazi ideology," president David Ossip and chief executive Darren Bark said.
They noted the premier was a "staunch supporter" of the NSW Jewish community, securing funding for the Sydney Jewish Museum when treasurer.
RSL NSW said in a Twitter post it noted the premier's apology, adding the veteran-support charity was conscious of the harm caused by the Nazi regime to millions, including to Australian service personnel and their families.
Federal Liberal MP Julian Leeser, who is Jewish and whose electorate overlaps Mr Perrottet's state seat, said the swastika was the most repulsive symbol for a Jewish Australian.
"I can say the Dom Perrottet I know - a man who is a loving father, a conscientious local member and hard-working and serious premier - is a world away from the arrogant, ignorant, heartless and mean-spirited actions of a university student," he said.
Wearing swastikas, displaying Nazi memorabilia and waving Nazi flags is a crime in NSW, punishable with up to a year in prison and a fine of up to $11,000 after new laws passed the NSW parliament in August.
