The government dubbed the move "an Australian-first initiative to boost hospital staff and provide medical students with invaluable paid experience".
The pilot program, under way in Hunter New England Health district, involves a partnership with University of Newcastle and TAFE NSW.
Wards at John Hunter Hospital, Rankin Park Centre and Belmont Hospital have participated in the program.
It is planned to expand elsewhere in the district during the summer semester break.
NSW Minister for Regional Health Ryan Park said the "learn while they earn" program involved first and second year Bachelor of Medical Science/Doctor of Medicine students at the University of Newcastle.
Mr Park said students who join the program would become "assistants in nursing", after attending TAFE workshops.
"This program is helping to build a strong and confident medical workforce," Mr Park said.
"The experience gained by these medical students will help shape the doctors they become. It's fantastic to see regional health districts being innovative."
Medical student Thomas Otto said he spent 80 hours on a ward, following two eight-hour workshops at TAFE.
"You get used to taking care of the patients' physical needs and communicating with the other nurses around you," he said.
"I've seen numerous drugs, patient conditions, lab results, image scans and models of care."
He said this experience "ignites a passion inside you to keep studying harder".
"It's bolstered my enthusiasm for healthcare".
Hunter New England Health executive director for nursing and midwifery, Elizabeth Grist, said students in the program would work "in a variety of fields" - hospitals, NDIS, aged care and private agencies.
Ms Grist said the nursing skills the students learn would help them "greatly throughout their medical degree".
She said the program "came about following a colleagues' experience in the United Kingdom".
The program had learnt from "successful overseas initiatives" and would support and grow the "skilled workforce".
"Students have found it rewarding to be working alongside our nursing, medical and allied health staff."
She said the experience provided students with "a greater appreciation" of roles and collaboration in health care.
Dean of Medicine at the University of Newcastle, Professor Jane Bleasel, said the work and training of an assistant in nursing "complements the studies of the first and second-year students".
"We're committed to giving students every opportunity to be highly employable and confident graduates," she said.
"This program allows our students to gain earlier - and more extensive - time in a clinical environment before longer placements later in their degree."
Hunter New England Health responded at the time that the hospital was "appropriately staffed and resourced".