Up to 7000 refugees fleeing conflict in Syria and Iraq will be resettled in NSW, with the first arrivals expected by the end of the year.
The groups of mostly women, children and families will arrive in small groups "of a few hundred people" over the next 18 months.
The state will look at ways to settle refugees around regional NSW, especially those with no family links in metropolitan areas.
The availability of health and education facilities would be critical in determining the communities where refugees would be based, NSW Coordinator-General for Refugee resettlement, Peter Shergold said.
He said the government has begun working with community, education and private sector groups to determine what accommodation and services are available.
It's likely many of the refugees will be educated, have professional training or skills and speak some English.
"Therefore the challenge is how can we harness that education and those skills so that (refugees) can contribute back to Australian society as soon as possible," Professor Shergold told reporters on Wednesday.
"My hope is that I will celebrate my 100th birthday in 2046, by raising a glass of champagne to our leading Australian businesswoman who arrived here as a young lady in NSW in 2016."
Australian government officials will work with the United Nations High Commissioner for Refugees (UNHCR) at camps in Jordan, Turkey and Lebanon on the selection process.
The federal government plans to take in 12,000 refugees.
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