All NSW children will be able to spend the year before they start school in full-time play-based learning in a "revolutionary" shake-up of the early education system.
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Preschool from Monday to Friday will be free for every four or five year old in NSW from 2030.
NSW and Victoria announced the bold plan, with the premiers saying both states will "embark on the greatest transformation of early education in a generation".
"Every child in Victoria and NSW will experience the benefits of a full year of play-based learning before their first year of school," they said.
Announcing the program at an early childhood centre in Sydney, NSW Premier Dominic Perrottet said the ultimate goal was to have universal preschool education in NSW.
"We will ensure that our kids get the best social outcomes (and) the best educational outcomes," he told reporters.
Touting it as a revolutionary change to schooling, Mr Perrottet said the flow-on economic effects would be enormous.
"By going down the path of revolutionising our school system and early childhood education, (it) will ensure that our kids get the best start in life ... (and) also provides important opportunities for women to get back into the workforce," he said.
Education Minister Sarah Mitchell says the extra year will be a "gamechanger" with kids attending for free, five days a week, from 2030 in a budget pledge worth $5.8 billion over ten years.
"This will absolutely change lives ... It's worth every penny," she said.
"We're effectively covering the cost of a full year of childcare".
Trials will start next year in some communities, with the program eventually expected to benefit 130,000 children a year.
Thousands of early education teachers will need to be recruited and trained and more preschools will have to be built at primary schools.
Treasurer Matt Kean trumpeted the long-term reform as an economic boon for the state.
"It's about investing in our children and that means investing in our state's future," he said.
"Every dollar we invest in childhood education is a two dollar boost to our economy."
The government has already announced it will spend $1.4 billion to subsidise preschool from next year, as well as $5 billion over a decade to deliver more childcare places.
The NSW Teachers' Federation welcomed the government's commitment, noting there are only 100 public preschools across 1700 public primary school sites.
But Labor said the addition of another year of schooling would require more teachers.
"After 12 years of inaction, now the government would have us believe they're going to roll out a new plan that's going to take eight years while we're in the middle of a chronic teacher shortage," education spokeswoman Prue Car said.
"We can barely get teachers to staff our current classrooms."
The state opposition has initiated an upper house inquiry into the teacher shortage, noting there are nearly 2400 vacancies in NSW.
Mr Perrottet said the dire shortage was a result of borders closures during the pandemic.
"We need to be looking at new ways of attracting people into the country," he said.
He vowed to raise the issue of attracting skilled migrants with Prime Minister Anthony Albanese.
"At the moment the wait is too long ... there is a major backlog of visa application that need to be processed by the Commonwealth government".
Australian Associated Press
