Festivals deemed high risk have been put on notice with the NSW government saying organisers need to step up and improve their safety standards.
Premier Gladys Berejiklian on Tuesday said festivals which have had deaths or serious injuries in the past will be deemed high risk and will have to "step up".
"This is aimed at those people who have high-risk festivals who in the past haven't done the right thing," Ms Berejiklian told reporters in Sydney.
"We are all lifting our standards. The festival and event organisers for these high-risk events need to step up as well."
Festivals will be subject to a new licensing system and NSW Police, NSW Health and Liquor & Gaming NSW will work together to oversee festival preparations.
The new regime starts in March but interim measures are in place for summer festivals deemed high-risk.
Mountain Sounds Festival, which was due to be held on the Central Coast this weekend, was cancelled with organisers blaming the government's "war on festivals".
Organisers wrote on Facebook they agreed to downsize their site and cancel more than 20 acts to make sure they complied with new licensing, safety and security measures.
But then, organisers claim, they were hit with a last-minute $200,000 bill from NSW Police for 45 officers.
Ms Berejiklian, however, argues the festival didn't sell as many tickets as they had hoped to.
"Mountains Festival didn't sell enough tickets ... and they didn't want to lift their standards even though they're a high-risk festival," she said.
Event organisers insist the festival "was never in doubt ... due to financial issues," a spokesman said in a statement to AAP.
NSW Police argue the information originally provided to them from organisers "did not accurately reflect the number of expected attendees and revealed numerous breaches".