The controversial wages cap for NSW public sector workers will be ditched in two months.
The move was a key pledge from Labor before the state election in March and will end the long-standing ceiling on public sector pay rises under the previous Liberal-National government.
Acting Premier Prue Car announced on Monday the decade-long cap that restricted pay rises for teachers, nurses and paramedics would be lifted in September.
"This is our commitment to the people of NSW that this will be scrapped in September," she said.
The announcement was timed to coincide with Labor's first 100 days in office. The government has faced "serious and real" challenges, including the public sector pay dispute.
Ms Car said an offer of a 4.5 per cent rise had been made as part of "in good faith" negotiations with public sector unions, including those representing essential workers.
"Even with a huge budget black hole", the government had offered essential workers the biggest pay rises in more than a decade, she said
"It has been difficult, being a government is difficult," Ms Car said.
Public sector workers were last month offered an annual pay rise of 4.0 per cent plus a 0.5 per cent lift in superannuation - not enough to keep pace with stubbornly high inflation.
Treasurer Daniel Mookhey said at the time finances went against an offer in line with inflation - running at 5.6 per cent - with state debt forecast to hit a record $180 billion within three years.
The delayed NSW budget will be delivered in September with the government promising pay rises will be funded through productivity improvements.
The opposition has previously accused the government of misleading frontline workers - after the promise to lift public sector wages formed a central plank of Labor's election campaign.
The signature wages policy is reportedly set to cost the state billions of dollars.
