The government in April 2020 provided a funding package to cover the cost of preschool fees for up to six months amid the pandemic and then extended the program to the end of 2020.

In November, free community preschool was again extended to the end of 2021, providing up to 15 hours of free care per child each week.

Treasurer Dominic Perrottet on Sunday said in a statement that community and mobile preschools would be made free until the end of 2022, with the government intending to fund the service on a permanent basis.

The measure, to be included in next week's NSW budget, will cost $150 million through to the end of 2022.

"The program supported countless jobs, and kept children learning and engaged during some of their most important years," Mr Perrottet said.

'I'm delighted that we can continue funding these crucial years in a child's development while easing the cost of living pressures for families."

Education Minister Sarah Mitchell said the measure could help families save up to $4000 per year in preschool fees and would benefit up to 740 preschools.

Some 44,000 three to five-year-olds attend community preschool in NSW.

Australian Associated Press