From midnight on July 21, a border zone will be set up along the Murray River and criteria for cross-border travel will be tightened.
All current travel permits will be cancelled and residents in the border zone who wish to move between the states will have to reapply.
Travel will only be allowed for work, education or for medical care, supplies or health services.
“The growing rates of community transmission in Victoria have us on high alert,” NSW Health Minister Brad Hazzard said in a statement.
If NSW residents travel beyond the border zone into Victoria, they will be forced to self-isolate for two weeks when they return.
Among the changed permit requirements, staff or students of boarding schools or universities must self-isolate for two weeks and obtain a negative swab before attending school.
Seasonal workers from Victoria are also banned from entering NSW.
NSW recorded 18 cases in the 24 hours to 8pm on Saturday, while Victoria recorded three deaths and 363 new cases on Sunday.
The tougher moves come as NSW students return to school from Monday.
Meanwhile, Batemans Bay Soldiers Club on the NSW South Coast has been forced to close its doors for two weeks after eight people who attended the venue tested positive, including a staff member.
Anyone who attended the club on July 13, 15, 16 or 17 has been advised to immediately self-isolate for 14 days.
“The concern in Batemans Bay is the ageing population down there and the transient nature over the school holidays of the population,” NSW Police Minister David Elliott told the Seven Network on July 20.