Health Minister Brad Hazzard has amended a public health order which left employers in the Hunter facing $10,000 fines if they did not force their workers to stay at home.
Mr Hazzard said he had signed amended orders at 10.44am on Tuesday limiting the work-from-home order to Greater Sydney.
The order, which came into effect on Sunday, said employers must make their staff work from home unless it was not "reasonably practicable" for them to do so.
The wording left many regional NSW employers unsure if they were breaking the law by allowing staff to come to work.
NSW Health tweeted on Monday and at 11.26am on Tuesday that "every employer across NSW" must follow the rule.
But Mr Hazzard said the order had not been intended to cover regional NSW.
"In the rush to try and defeat a virus that's quickly moving, parliamentary counsel who draft these orders and present them for signing might not get absolute precision on every issue," he said.
He said the instructions to counsel had been "confused" and he had signed an amending order before Tuesday's media conference.
Hunter Business chief executive officer Bob Hawes welcomed the change of heart.
"It's not as hard and fast as it would have been interpreted yesterday or Sunday," he said.
"We're relieved because we were getting a lot of calls from businesses and chambers, 'What are we supposed to be doing?'"
He said the order had been particularly confusing because the government had issued other advice over the weekend that regional restrictions had not changed.
Mr Hazzard said on Tuesday that it was "still wise" for employers throughout the state to "try to allow" their staff to work from home.
A Coalition source said the government was hopeful the Greater Sydney stay-at-home orders and tighter restrictions would not have to extend into regional NSW as case numbers started to edge down.
The government has shut down the Greater Sydney building industry until July 31, but Sydney workers can still travel to regional NSW to work.
Asked whether this was putting communities outside Sydney at risk, Premier Gladys Berejiklian said regional businesses should have "very stringent" COVID safety plans in place.
NSW added one death and 78 new cases in the 24 hours to 8pm on Monday night as a Wallsend service station became the latest exposure site in the Hunter.
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