There will also be a maximum 25 year sentence for having sex with a child.
The State Government hopes the changes in the laws will lead to a decrease in sexual assault and child abuse, and bring state laws inline with the Commonwealth.
NSW Attorney-General John Hatzistergos says the laws have been updated to represent modern times, including the use of technology in committing crimes, ABC Online reports.
We're also changing a wide range of laws including creating a new offence of voyeurism and aggravated voyeurism similar to the United Kingdom laws, with penalties ranging from six months to two years to replace the outdated people and prying laws, he said.
Hatzistergos says the legislation will be introduced at the next session of Parliament.
This is a timely report to deal with a critical issue, he said.
Meantime the Law Society of New South Wales has rejected claims that the state government's plan to change penalties for sex offenders was prompted by artist Bill Henson.
Henson s work has sparked much public debate since police seized photographs featuring a naked 13 year old girl from an exhibition at a Sydney gallery in May.
But the Law Society s president, Hugh Macken, says the proposed new penalties were being discussed long before the controversy surrounding Henson s work began.
It s got absolutely nothing to do with Henson, he said.
The Sentencing Council was commissioned to prepare this report some lengthy period of time ago, last year, well before Henson.
It doesn't particularly address any of the matters raised in Henson, other than so far as it looks to watering down the defence of artistic intention in the Crimes Act.
What the report recommends is the removal from the artistic purposes defence of child pornography that depicts children of torture, cruelty, or physical abuse, or engaged in sexual activity.
"That would not affect Henson. Those works of art never depicted children being tortured physically, abused or engaged in sexual activity. Nudity is not sexual activity.