Dogs that have never attacked a person but show signs of aggression can now be deemed "menacing" in NSW, with rangers able to force owners to use a muzzle.
In a crackdown aimed at stopping further dog attacks, a third category will be added to the two types of dogs that are already restricted.
The NSW cabinet has approved legislation to amend the Companion Animals Act, allowing council rangers to declare a dog "potentially dangerous" if they believe it's likely to attack.
Announcing the measure on Wednesday, Local Government Minister Don Page said councils will have more discretion when balancing community safety against restrictions.
"We're providing council rangers with a preventative tool to be able to go and identify a dog that's aggressive, maybe hasn't attacked yet, but ... could if it was given the opportunity," Mr Page told reporters on Wednesday.
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The changes are in response to recommendations from the state's Companion Animals Taskforce, and come weeks after the death of two-year-old Deeon Higgins, who was mauled by his cousin's bullmastiff in Deniliquin in the state's southwest this month.
The dog had not been considered dangerous before the attack.
Under the changes, dogs deemed as menacing will have to be muzzled and on a leash under the control of a person of 18 years or over when in public.
Dog owners can challenge a decision by taking their pet for a behavioural assessment, which they would have to pay for, Mr Page said.
"Vexatious" and "frivolous" complaints against dogs will also be penalised, he said.
Owners who ignore the rules for dogs in the three restricted categories will face maximum jail time of five years if their dog attacks.
Fines will also increase to a maximum of $77,000 from $55,000.
Chairman of the taskforce, Andrew Cornwell, said the change will help councillors charged with making a difficult decision.
"There are a lot of cases where councils get a report, they'll go out, have a look but don't use that power because they feel it's too onerous," Mr Cornwell told reporters.
"And sometimes ... councillors have regretted that decision because someone has then subsequently been attacked."
The new legislation now needs to be passed by state parliament.
