The rule of one nurse for every three patients will be first enforced in emergency departments before the group analyses the needs of other wards to determine what staffing levels are imposed around the state.
"When I visit hospitals and EDs the issue I hear about most often is experienced nurses and midwives leaving because they are overworked and under-resourced," Premier Chris Minns said on Thursday.
"I'm committed to ensuring the people who looked after us during the pandemic feel looked after by their government."
It comes after NSW nurses held high-profile rallies and protests in recent months, calling for enforced nurse-to-patient ratios and arguing the current system had left them burnt out.
The seven-member working group takes in high-ranking members of NSW Health and the state's nursing union, who will together convert current hospital staffing requirements into minimum, enforceable standards.
NSW Health people and culture secretary Phil Minns, who is the premier's uncle, and NSW Nurses and Midwives Association general secretary Shaye Candish are among those on the panel.
It will regularly meet with NSW Health Secretary Susan Pearce, who will update Health Minister Ryan Park on the group's progress.
"It won't be easy to undo a decade of rising wait times and understaffing, but this government is determined to begin to turn things around," Mr Park said.
"Rebuilding our health system will be a mammoth task, but it is important we get it done right."
Under the current ward settings, the number of nurses is calculated by nursing hours per patient day, which the union has long argued was failing to deliver safe care to patients.
The Labor government has also made a separate commitment to hire 1200 new nurses and midwives by 2027.
The government believes the two reforms will stop long-term nurses leaving the profession, and help attract new nurses into the field.