Sex workers in New South Wales are gearing up to defend the decriminalisation of their industry as a parliamentary inquiry considers changes to the regulation of the state's brothels.

Among the options being considered is a licensing system like those in Victoria or Queensland.

But sex workers have argued that any such moves away from total decriminalisation would harm their health and safety.

Joanne is one of many sex workers making submissions to the NSW parliamentary inquiry into the way their industry is regulated.

She said she was worried the inquiry could recommend tightening the rules that govern where and how sex workers do their jobs.

"To treat sex workers as different from other workers is outright discrimination and bigotry and that's what I fear this committee is going to resort to," she said.

The chair of the committee, Coalition MP Alister Henskens, said the inquiry would look at tightening existing rules.

"There have been some illegal businesses such as massage parlours flouting the current laws," he said.

"Also to look at the industry more broadly to see if there aren't issues around the protection of vulnerable people such as sex workers, whether there are incidents of sex trafficking and organised crime."

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The sex industry in New South Wales is one of the world's most progressive.

It has been 20 years since it was decriminalised, meaning there are no laws against sex work itself, although there are some restrictions on where it can take place.

Cam Cox is the chief executive of the Sex Workers Outreach Project (SWOP), which provides free condoms and health information to sex workers.

He is a sex worker himself and has warned against introducing a licensing system like those in other states.

"As soon as you start to take part of the industry underground, for people like us at SWOP, that makes it very hard for us to reach sex workers," he said.

"It makes it very hard for sex workers to go to the police if they have problems that they may need to go to the police for, and so we have that industry split into two, working against the health and safety of sex workers."

Inquiry has caused 'stress, worry, stigma and discrimination'

Mr Cox said there had been at least five New South Wales inquiries into the industry since 1995, and the latest one had already driven some businesses underground.

"Even in the last couple of weeks, when there has been publicity about possibly regulating and licensing brothels, we've had several places that we normally visit and get easy access to suddenly decide that they're not brothels at all and we haven't been able to gain access to them," he said.

Mr Henskens said he was aware of the risks associated with licensing but said the committee would still consider it as an option.

"It's important that whatever regulatory environment is put in place is not onerous in my view, and is not driving things underground," he said.

Joanne said she was confident the inquiry would ultimately support the existing system, but said sex workers would face a greater degree of stigma in the meantime.

"The committee process alone already has created a lot of stress and worry and stigma and discrimination among sex workers," she said.

"And I believe, as the committee rolls out, it's potentially only going to get worse."