An upgraded online database of cats and dogs will help reduce the number ending up in overcrowded shelters, through a $15.6 million funding boost.
As well as upgrading the 20-year-old Pet Registry, the NSW government announced on Thursday it would also provide an additional $5m in grants for rehoming organisations.
Grants of up to $100,000 will be available for approved organisations to help get more animals into their forever homes and reduce euthanasia rates.
The NSW Pet Registry allows cat and dog owners to update their contact details, report their pet missing and transfer ownership of animals.
Local Government Minister Wendy Tuckerman said state leaders were committed to tackling a surge in the number of homeless animals that followed the COVID-19 pandemic.
"In recent years we've seen significant improvements in the rehoming of companion animals in NSW and a substantial drop in euthanasia rates, however we will continue to work hard to bring those numbers down even further," she said.
A pilot program is under way involving up to 10 breeders and 50 new pet owners to help guide development of the new database.
Updated features will include allowing breeders to easily enter litters of puppies and kittens, enabling vets to add microchip numbers and making owner transfers instant.
Ms Tuckerman promised the new database would be "state-of-the-art and user-friendly".
"This will be a game-changer for NSW, assisting in future animal welfare enforcement activities and helping us reunite lost pets with owners faster," she said.
The pilot runs until June and the first phase of the new online pet registry is expected to be rolled out across the state from the end of 2023.
