The NSW government has approved applications for two popular Sydney bars to remain open for half an hour longer, after the state's lockout laws were relaxed in December.

World Bar, in Kings Cross, will now serve last drinks at 3.30am instead of 3am, and will close the venue to new revellers at 2am rather than 1.30am.

It is the first bar to be approved for extended trading in the suburb, which has seen a significant drop in revenue and foot traffic since the restrictions were put in place.

Iconic gay bar Stonewall, on Oxford Street, has also been approved for the later trading hours.