The new scheme would give all injured road users benefits for loss of income and medical expenses for up to six months, with lump sum compensation retained for those with long-term injuries.
Across the state, the average premiums are expected to drop from $650 to $528.
Premier Gladys Berejiklian said the new scheme would protect those with genuine injuries and ensure the bulk of premiums went towards injured motorists rather than legal fees and administrative costs.
“The current scheme has become the least affordable in the country and just 45 cents in every green slip dollar is returned to injured road users,” Ms Berejiklian said.
“We are committed to stamping out fraudulent and exaggerated claims and excessive scheme costs so we can deliver much-needed premium relief to the motorists of NSW.”
The scheme will also see a significant reduction in annual premiums for taxi owners in metropolitan areas of up to $3000 per year.
The legislation will be introduced this week, with the new green slip scheme likely to commence in December 2017.