A drier-than-expected June and July has left many farmers with failing crops, a short supply of water and diminishing livestock feed.
New South Wales officials released figures on Wednesday showing that every part of the state is affected, with nearly one-quarter classified as being in "intense drought".
Australia has long dealt with harsh, dry conditions, especially inland, away from coastal areas popular with tourists.
Australia's most populous state, has declared that it is 100 per cent in drought, with a quarter considered to be in "intense drought".
Less than 10mm of rain was recorded in the western, northwest, and central areas of NSW over the past month and drier-than-normal conditions are forecast for the next three months across the majority of the state.
The Government has responded with a compensation package to help rural communities, including two lump sum payments worth up to A$12,000 for eligible households.More news: Dez Bryant To Visit This Team Among Stops On Looming Free-Agency Tour
The state government last month quietly amended its drought map in response to fierce criticism from farmers without a green blade of grass, whose properties were categorised as being merely in "drought onset". "We recognise that. It's a very volatile and often capricious climate and Australian farmers are resilient, they plan for drought, they are good managers but it can become really overwhelming", said Prime Minister Malcolm Turnbull. Among them is New South Wales, which is facing the driest and most widespread conditions since 1965.
Others said it was too little, too late.
Others have had to bulldoze orchards or lose their farms, leaving entire families without income, according to Australian media.
It is not just farmers doing it tough, but also the towns that service them.
Less than 10 millimetres of rainfall has been recorded in the 800,000-square kilometre state over the past month.
Grazier Mark Wylie has spent Aus$30,000 in the past six weeks boring for groundwater, to no avail. "And the people in the city don't realise, or they are starting to realise now, everything does come off the land - the bread, the cereal, the milk".