An inquiry into Sydney's nightlife recommends CBD lockout laws be lifted as soon as possible, saying they cost NSW $16 billion a year and the city is "not the same city it was" at the time they were implemented in 2014.
But the parliamentary committee report, released on Monday, says the Kings Cross precinct is "not yet sufficiently changed" to warrant the removal of lockout laws, and the issue should be revisited in 12 months time.
The report found the February 2014 laws were both necessary and effective to rapidly reduce inner-Sydney alcohol-fuelled violence, following the one-punch deaths of Thomas Kelly and Daniel Christie.
But it argues the laws, involving a 1.30am lockout and 3am last drinks, have damaged Sydney's night-time business and culture, and their repeal could provide a $16 billion annual boost to the NSW economy.
The report recommends the CBD, including Oxford Street, have lockout and last-drinks laws repealed, as well as the prohibition on drinks such as shots and alcohol-laden cocktails after midnight.
It also recommends the trading hours for bottle shops be extended from 11pm to midnight from Monday to Saturday, and to 11pm on Sunday.
"Safety and a vibrant night-time economy should not be, and are not, mutually exclusive," NSW Liberal MLC and committee chair Natalie Ward told reporters.
"We believe we can continue to maintain and in fact increase safety while we also reinvigorate Sydney's night-time economy.
"It's now time to take stock and take proactive steps."
The report found more work was required in Kings Cross to ensure safety, with the district requiring a "specific, nuanced approach".
It says the repeal of lockout laws in Kings Cross, without improvements to lighting, street layout and venue density, would prompt a return to excessive alcohol consumption and violence.
A "pathway" program is recommended to help diversify Kings Cross and dilute the number of bars and clubs in close proximity, with a review of the laws in "The Cross" to take place in 12 months.
Sydney Lord Mayor Clover Moore said in a statement she welcomed the inquiry's recommendations and hoped they would "breathe oxygen into Sydney's nightlife", as did Sydney bar baron Justin Hemmes.
Mr Hemmes told the inquiry Sydney had suffered a significant decline in its vibrancy and become a "ghost town" at night.
"With the imminent completion and launch of Sydney's CBD light rail project and the pedestrianisation of George Street, we have an unprecedented opportunity to initiate a rebirth of our inner city and put it back on the international map," the Merivale boss said in a statement.
But Foundation for Alcohol Research and Education chief executive Michael Thorn said the recommendations put profit ahead of safety and were a "reckless capitulation to the alcohol industry".
"The premier (Gladys Berejiklian) must understand that in the future every death from alcohol-fuelled violence in Sydney will be on her head," Mr Thorn said.
Among other recommendations are the appointment of a "night time co-ordinator" to help nightlife stakeholders collaborate on safety, as well as the creation of a working group including police and doctors.
Ms Berejiklian earlier this month said she supported the removal of CBD lockout laws and hoped to amend legislation by the end of the year.
The Bureau of Crime Statistics and Research in August found non-domestic assaults dropped 53 per cent in Kings Cross and four per cent in the CBD since lockout laws were introduced in 2014.
But in the same period, assaults rose by 30 per cent at alternative nightspots.
