The move is part of a series of measures announced by the state government to counter violent extremism following the shooting death of a police worker last month.
New South Wales Premier Mike Baird says schools have an important role to play in countering extremism.
He says the measures will include training counsellors to identify vulnerable young people in schools.
"Before the last election, we announced over 200 additional counsellors would be going into our schools. And those counsellors, their job is to look out for and to care for the vulnerable youth in our schools. They are perfectly placed, in addition to those responsibilities, to look for measures, look for anything that comes in relation to concerns in relation to violent extremism. We will be providing training for them, so they are equipped to be able to look for anything in terms of violent extremism."
He says the move was prompted by the shooting death of police accountant Curtis Cheng by a teenager in Parramatta last month.
"We've seen the tragic consequences. We saw a young boy that was manipulated to such a point that the tragic act that followed is beyond words for us all. So we need to work across the community, across all schools, across the whole community and implement a range of of programs to ensure that we're doing everything we can. From our point of view the best way to do this is to do it together."
Education Minister Adrian Piccoli says no particular schools will be targeted as part of the move.
"So these measures that the Premier has just outlined are about making sure that we stop students from undertaking this risky behaviour, warn them about the people who might attempt to prey on them, and then the school's role, of course, given that a million children turn up to school every day, their role in identifying students who might be at risk. So this is all about prevention."
Premier Baird says his government will also provide $8 million in funding to a range of organisations committed to youth engagement, with the programs involving high-profile community leaders.
He says government workers, such as Family and Community Services officers, will also undergo similar training programs.
The Premier says a hotline and online services will be set up for people needing advice on how to help young people who may be exposed to extremism.
Prime Minister Malcolm Turnbull has welcomed the measures, saying the radicalisation of young people is occurring at what he describes as an "alarming rate".
"There's been very close collaboration, as you know, between the state and federal governments - between the Federal Government, our government and all state governments and territory governments. This is, what Mike is doing, is very important and he certainly has our full support and we endorse the programs that he's rolling out."
However, University of Sydney expert Hussain Nadim says the move is counter productive.
"The entire idea and the entire issue of radicalisation, its roots are embedded in this very notion that kids, especially Muslim kids, feel isolated and aren't able to integrate and having these programs run at the school level will not help countering that, it will only allow further isolation and further radicalisation of kids at the high school level."
Mr Nadim says he was surprised to read that only $7 million of the funding will go directly to training school staff in identifying so-called "at risk" students.
"It is almost impossible to identify at-risk students. How is the government or teachers going to identify who is at risk and who is not at risk at the age of 13, 14, 15 and 16? Secondly, these programs have already been tried, tested and disengaged in the other countries like the US. For example, a recent event in the US when a Muslim kid brought a clock to school and it was seen as a bomb, and it had a widespread rejection from the community all over the US, even President (Barack) Obama came out against this idea. So I think this will not work. And $47 million for something like this? I really want to see where this money is going and how it is being spent. And is it really necessary to do this in this specific way?"
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