A drastic crackdown on central Sydney pubs and clubs will turn drunken revellers on to the street with few ways of getting home, the hotel lobby has warned.

The fears were echoed by Sydney lord mayor Clover Moore, who says the measures risk shifting the problem of booze-fuelled violence to nearby suburbs.

The O'Farrell government announced on Tuesday that venues will be forced to lock out patrons from 1.30am and stop selling alcohol by 3am.

The changes would apply to an area stretching from Kings Cross to Cockle Bay, and from The Rocks to Haymarket and Darlinghurst. Suburbs just outside the border include Elizabeth Bay, Rushcutters Bay, Paddington, Surry Hills, Chippendale, Darling Harbour and Pyrmont.

No new venues will be allowed to open within the boundaries. In addition, all bottle shops in NSW will have to close at 10pm.

Premier Barry O'Farrell said he made ''no apologies'' for the reforms, adding ''the community wants strong action''.

As part of his proposed package, Mr O'Farrell wants to remove voluntary intoxication by drugs or alcohol as a "mitigating factor" when courts are sentencing offenders, and increase the maximum penalty for violent crimes where drugs or alcohol are aggravating factors.

Mr O'Farrell will also seek to introduce an eight-year mandatory minimum sentence for those convicted under new one-punch laws, when the offender is intoxicated by drugs and/or alcohol, plus new mandatory minimum sentences for violent assaults where intoxicated by drugs and/or alcohol.

The lockout and last drinks measures will be reviewed after two years.

Cr Moore hoped the package would "send a clear message that drug- and alcohol-fuelled violence in Sydney will not be tolerated" but questioned how revellers leaving venues would be dispersed.

"On city streets late at night there are tens of thousands of people, yet the last train from Kings Cross leaves at 1.44am and the next is not until 5.14am. That's when numbers of people on the street are at their peak and they're frustrated they can't get home easily," Cr Moore said.

Mr O'Farrell said buses from Kings Cross to the city on Friday and Saturday nights would be free. However, Cr Moore said research showed other measures were required, including 24-hour trains, buses and light rail.

"What we don't want to see is tens of thousands of people making their way to other areas just outside of the new precinct," Cr Moore said.

She called for monitoring of neighbourhoods outside the government's proposed precinct boundaries to ensure problems were not "being shifted somewhere else".

She also said the government should also do more to address the problem of "pre-fuelling", where people fill up on shop-bought liquor before hitting pubs and clubs.

The proposed area targeted by licensing restrictions.

Streets will be full of drunken revellers: hotel lobby

A spokesman for the Australian Hotels Association NSW also pointed to early-morning transport as a problem.

The organisation was ''sceptical'' about the effectiveness of lockouts and last drinks at 3am, which coincides with the taxi shift changeover.

''We do not believe tens of thousands of people will stay in licensed premises past 3am once alcohol is no longer served, but will instead be out on the streets looking for a way home,'' the spokesman said. ''The government will need to address this new issue.''

He said the AHA ''wholeheartedly welcomes tougher sentencing for thugs'' and the recognition of the role drugs played in night-time violence.

Australian Liquor Stores Association NSW chief executive Terry Mott said education would be required to inform the public and tourists that "they will no longer be able to purchase packaged liquor for late BYO restaurant supper meals or for special events in the evening".

New Human Rights Commissioner Tim Wilson, who takes the position next month, strongly criticised the lockout measures, which he said had failed in Victoria.

"A lockout limits the rights of law-abiding patrons to exercise their right to self-determination by engaging in legal behaviour. Lockouts also arbitrarily punish licensed premises,'' he said.

An independent review of the Liquor Act last month rejected calls for "one size fits all" trading hours, saying it would unfairly penalise compliant venues and affect employment and the economy.

Package makes Sydney safer: business

However Sydney Business Chamber executive director Patricia Forsythe supported the government's package, saying it would ensure Sydney maintains its reputation as a "safe city for entertainment".

She said the measures ‘‘give assurance" to Sydneysiders and visitors that they could venture into the city safely at night.

"Sydney has a reputation as a safe city and that has been damaged by the actions of a handful of individuals," she said.

Tourism Transport Forum chief executive Ken Morrison said the reforms met the needs of the tourism industry.

"Sydney has an international reputation as a friendly, safe and welcoming city and these measures will ensure the city retains that positive image at the same time as ensuring that visitors’ needs can still be catered for," he said.

NSW on road to justice: victim's family

Doctors, policy experts and industry groups have largely welcomed the proposals, as did the family of one-punch victim Thomas Kelly, who said the proposals suggested NSW was finally "on the road towards justice".

"Too often, alcohol abuse and excessive drinking is actually used as a defence in court as an excuse for their criminal behaviour. The time for excuses is over," Thomas Kelly's father, Ralph Kelly, said.

"Nothing can bring back Thomas, or the many other innocent victims of these terrible crimes of violence. But today, we are on the road towards justice."

Add other problem late-night precincts: doctors

The Australian Medical Association NSW welcomed the proposed lockouts and time limit for last drinks. President Brian Owler said the measures should be considered at other problem late-night precincts such as at Coogee, Bondi and Parramatta.

"These laws provide some good preventative measures to reduce alcohol-fuelled violence. Every weekend, hospitals are filled with people who have sustained preventable injuries as a result of alcohol-fuelled attacks or from accidents while drunk," he said.

"Too many people have already lost their lives or have sustained permanent brain damage or paralysation from these sorts of events."

Public Health Association of Australia spokesman Mike Daube said the government's strong approach "may be a turning point in changing the binge-drinking culture".

"There is of course further action to be taken, but the Premier has clearly listened to the community," Professor Daube said.

"He has gone well beyond rhetoric and retribution, with an evidence-based program that will include curbs on access and strong public education. He is sending out a strong signal not only to the NSW community, but also to other governments.”

Premier "cherry-picking" solutions: Greens

But NSW Greens MP John Kaye accused the government of "cherry-picking" solutions for the sake of headlines while shying away from "hard-nosed solutions that would offend the more powerful sections of the alcohol industry".

"The profits of the major bottle-shop owners will be largely untouched by the Premier's proposal ... preloading will continue unabated from bottle shops, that will feel like they dodged a bullet today," Mr Kaye said.

"The industry has lobbied its way out of any restrictions on shopper dockets, deep discounting, sporting sponsorship and other promotions, which are proven to increase harmful consumption of alcohol."