The state's 165 COVID testing clinics will all close by May 13, Health Minister Ryan Park said on Wednesday, saying demand for the free service has dwindled and they are costing the state "millions of dollars every single month".
Operating and staffing the clinics this year alone had cost between $11 and $12 million, Mr Park said.
"Millions of dollars every single month is being saved as a result of this," Mr Park told reporters on Wednesday.
"I want to make sure that every single dollar that is given to NSW Health through me is spent effectively, properly and it's targeted where it's needed most."
Demand for the free service has significantly reduced since January, as health recommendations meant more people were relying on rapid antigen tests (RATs).
Vulnerable groups still needing to access PCR tests, including those wanting to access antiviral medication, will require a referral from a GP before they can get a test at a pathology clinic.
The process will be similar to when a patient requires a routine blood test, and bulk billing doctors can be found through the government's Healthdirect website.
The state will transition to a new model of COVID testing, focused on mass distribution of free RATs, which will be more cost effective and better support the needs of the community, the health minister said.
RATs will be made available by local councils, Service NSW centres, local sports clubs, libraries and at the offices of state MPs for residents to freely access under a new strategy being rolled out by NSW Health.
"I want to essentially flood NSW with rapid antigen tests so that the availability is easy and accessible for everybody," Mr Park said.
"People can pick them up when they're not unwell and just have them in the kitchen cupboard or in the bathroom cupboard and be able to use them as quickly as possible."
The announcement did not signify the virus, which led to lockdowns, lasting for months in Sydney in 2021, was not still circulating in the community, the health minister said.
"Let me assure, (COVID) is still around and in the community, but we're starting to shift our focus and shift our plan."
Premier Chris Minns flagged the change on Tuesday, saying he had recently driven by a western Sydney testing clinic that was empty.
"We need to make sure that public money has been protected," he said.
Chief Health Officer Kerry Chant said the majority of people found RATs the most convenient option but advised people most at risk of severe COVID to get a PCR test.
"PCR testing requested by a medical or nurse practitioner will continue to be available at private pathology services with a referral form," Dr Chant said.
"This will ensure effective, fast diagnosis so those who are most at risk are able to get timely access to antiviral therapies."
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