Supermarkets will be banned from displaying cigarettes within six months and small retailers will have to hide packets behind their counters within a year under the laws.

Cigarette vending machines will be restricted to pubs and clubs and they will accept only tokens, which smokers will have to buy from the bar. The machines will not be allowed to display any advertising.

Tobacconists will have to black out their windows so cigarettes are not visible from the street and within four years they will also have to keep them under counters. Smoking in cars with children under 16 will also be banned.

The Premier, Morris Iemma, who will announce the laws today, said he did not care if they seemed "over the top".

"When it comes to smoking, we'll always err on the side of caution. Tobacco companies advertise their products for one reason - they want more customers. We want them to have [fewer]," Mr Iemma said.

"So we're going to take them out of eyesight, and ensure young people aren't tempted into taking up smoking by glossy advertising or marketing pressure when they go shopping. We also have an obligation to those who've kicked the habit."

Mr Iemma said children in cars should not be forced to breathe in toxins from their parents' cigarettes.

"If parents smoke in cars, they take that health choice away from their children. I'm determined to enforce that responsibility, even if some parents aren't," Mr Iemma said.

Simon Chapman, a professor in public health at the University of Sydney, said banning cigarette displays was crucial to lowering the rates of smoking and NSW would be the first state to implement the ban.

Professor Chapman said even tobacco companies could not deny smoking in cars with children was dangerous to their health. But the companies had fought a bitter battle to prevent the Government banning cigarette displays.

"This decision shows an exceptionally mature cabinet," he said.

Professor Chapman said NSW followed the lead of Thailand, Iceland and 12 provinces in Canada in banning displays.

The ban on cigarette displays - intended to cut down on youth smoking and on tobacco advertising - was first announced by the former cancer minister, Frank Sartor, in February 2004, but it was dumped in 2006 after lobbying from retail groups.

But the Minister Assisting the Health Minister (Cancer), Verity Firth, took up the proposal again in October last year.

Ms Firth said research showed that as many as 27 per cent of cigarettes bought were purchased on impulse and that young smokers and recent quitters were most likely to buy cigarettes on impulse.

"Point-of-sale displays act as cues to smoke even among those smokers trying to avoid smoking or not intending to purchase cigarettes," Ms Firth said.

"A recent Cancer Institute NSW survey found that 31.4 per cent of frequent smokers said that storing tobacco products out of sight in shops would make it easier for them to quit."