Smoking in hotels and bars will be banned for most of Australia by 2007, in a bid to protect bartenders from inhaling cigarette smoke.
Smoking is already banned in areas such as Bondi Beach
The ban in New South Wales, including Sydney, will be phased in from 2005. Only the outback Northern Territory is not introducing a ban.
Sydney city council said it was also
waiting for a report on whether to ban smoking in city parks.
Nationwide bans on smoking have already been introduced in Norway and Ireland.
"For a person working in a bar for eight hours, that's equivalent to smoking half a packet of cigarettes and we can't ask bar workers to put their health at risk," New South Wales Premier Bob Carr said in a statement released on Wednesday.
There are already restrictions on public smoking in Australia. In New South Wales, it is forbidden to smoke in parts of public bars and on two of the country's most famous beaches - Bondi and Manly.
Across the country there are restrictions in smoking in restaurants and shopping centres.
The Australian Hotels Association opposes the new smoking ban, arguing that up to 8,000 jobs could be lost.
But Mr Carr said that the experiences of other countries showed that there were no negative effects on trade.
Sydney Mayor Clover Moore said she thought it would be better for business, because people put off by the smoky atmosphere in bars would return.