Owners whose homes are forcibly acquired by the NSW government for infrastructure projects, such as WestConnex and the Sydney Metro, will be able to claim more money for inconvenience and have extra time to negotiate how much they are paid for their property.

Under changes announced on Tuesday, a rule that owners can be forced to pay rent for the right to stay in the property while they are appealing the amount of compensation being offered has also been scrapped.

However, Premier Mike Baird and Finance Minister Dominic Perrottet were forced to defend the 2½ years it has taken for the government to respond to recommendations of a report on how to make the compulsory acquisition system fairer.

They have also rejected a key recommendation of the report by David Russell SC that all home owners be compensated on a "reinstatement basis" to ensure they can afford to an "equivalent" home. This compensation will only apply in "limited and specific" circumstances.