Both houses of parliament were recalled from their summer recess to debate the laws, which will allow police to lock down areas where disorder is occurring or is threatened.
Authorities will also be able to stop and search people and vehicles, seize vehicles and mobile phones for up to seven days and demand that people identify themselves.
They will also have the power to close licensed premises and demand alcohol-free zones.
Lockdowns will last for up to 48 hours unless extended by the Supreme Court, and the relevant laws will be overseen by the ombudsman and expire in two years unless parliament votes to extend them.
A new offence of assault during a public disorder will carry maximum penalties of five years in jail for assault not causing actual bodily harm, and seven years for actual bodily harm.
Under amendments to the Crimes Act, the maximum sentence for rioting will be increased to 15 years, up from 10 years, and the maximum sentence for affray will be doubled to 10 years.
The emergency legislation was introduced following Sunday's race-related riot at southern Sydney's beachside suburb of Cronulla, when a drunken mob attacked anyone of Middle Eastern appearance.
This was swiftly followed by apparent retaliatory attacks by members of Sydney's Lebanese community.
"As long as these thugs, these hooligans, these hotheads and these criminals disrespect the law, as long as they refuse to show respect and responsibility, these powers will be used to the fullest extent," said NSW Premier Morris Iemma.
"Order will be upheld, our streets and suburbs will be kept safe, our police will be backed to the hilt."
He said the government is determined to give police the powers they needed to quell the unrest, and those involved will not be permitted to undermine "our way of life".
While state opposition leader Peter Debnam said his side would back the laws, but described them as inadequate.
The local mayor in Cronulla said the state government needs to promote community discussion on Sydney's race problems, and this will not be solved simply by adding more police.
Sutherland Shire mayor Kevin Schreiber said it's time the government "took a leadership role".
"Whilst I am highly supportive of the legislation ... we must acknowledge that this is not just a policing matter," Mr Schreiber said in a statement.
He said the government needs to restart discussions with community leaders and establish an education campaign, and its help is needed in getting the message across that beaches are there to share.
"This needs to be a multi-faceted media campaign that also addresses other key social issues including the need to accept basic cultural difference," he said.
In a show of religious unity tomorrow, The Australian Federation of Islamic Councils, Australian Islamic Cultural Centre, the Muslim Council of NSW and Al Faisal College will meet at Auburn Uniting Church, a part of which burned to the ground in an incident linked to the race-fuelled violence.