Rescuers have told the Newcastle Herald of examples of puppy farms in Maitland, Raymond Terrace and along the Bucketts Way in the Stroud area that breached welfare laws, but were still operating.

They knew of other puppy farms that operate out of sight in areas such as Inverell, Kempsey and Armidale.

The NSW government has announced a move to regulate the dog breeding sector and "expose and shut down puppy factories".

The move comes after the government faced strong community criticism over puppy farms remaining legal in NSW.

It also follows Animal Justice Party MP Emma Hurst introducing a bill into NSW Parliament, calling for an end to "large scale puppy farms and backyard breeding".

That bill is scheduled to be debated in the Legislative Council next week.

In Victoria, the number of female dogs at a breeding site is capped at 10 and the number of litters allowed per dog is five. NSW has no such laws.

NSW Minister for Agriculture Adam Marshall has released a consultation paper about licencing and regulating dog and cat breeders.

Mr Marshall said the proposed changes would not affect primary producers or small-scale breeders.

"These changes are aimed squarely at those large-scale commercial breeders who are profiting off the back of animal cruelty," he said.

Ms Hurst said her bill would cap the number of female breeding dogs and litters each dog can have.

"It also includes a traceability scheme, ensuring that animals being sold from any dodgy backyard breeders can be identified and investigated," she said.

She said Mr Marshall had "failed to outlaw this vile industry" and raised concerns that the government was "apparently attempting to enshrine it in law through a 'licensing' scheme".

She warned that "Australians hate animal cruelty".

Dog Rescue Newcastle president Sue Barker has witnessed cases of neglect from heartless breeding operators.

"The puppies that come in [for rescue] aren't healthy because the mums aren't healthy," Ms Barker said.

"They're not kept in clean, sterile conditions and not fed proper food, wormed, socialised or exercised."

Dog Rescue Newcastle volunteer co-ordinator Lauren Baker said a lack of enforcement was a key issue in the breeding sector.

Ms Baker said there was a breeding underground, with dodgy breeders who "don't advertise who they are and where they are".

"They're hidden on large properties and in the bush and they use secondary people to sell the dogs," she said.

The government's consultation paper was a response to heightened concerns about breeding practices made worse by "skyrocketing demand for pets during the pandemic".

The government proposed a "commercial dog breeder licencing scheme" to provide "additional oversight of larger-scale breeders to give the community confidence breeders are providing a high standard of welfare for their animals".

"The vast majority of breeders are complying with the current animal welfare laws, however there are some unscrupulous operators, which is why we need to introduce a licencing scheme," Mr Marshall said.

The consultation paper is open for comment until December 31.