Prime Minister Tony Abbott has triggered a reshuffle within the state executive of the New South Wales Liberal Party after declaring party members should no longer work as lobbyists.

Two of the state's most powerful conservative lobbyists Michael Photios and Joe Tannous resigned from their party roles just hours after the announcement.

Mr Abbott set down new ground rules during a media conference with NSW Premier Barry O'Farrell on Thursday morning.

"I am determined to ensure that as far as the new Coalition government in Canberra is concerned that not only is it clean and fair, but it's seen to be clean and fair," he said.

"That's why I'm determined to ensure you can either be a powerbroker or a lobbyist but you can't be both."

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Mr Photios, one of the most powerful men in the state, resigned from the NSW Liberal Party executive after 30 years of service.

He runs the lobby firm Premier State and is responsible for kick-starting the careers of many current NSW MPs.

He is also good friends with Mr O'Farrell and has previously admitted to giving him political advice.

"I have always conducted myself in the operation of all government relations advisory services with the utmost integrity and entirely consistent with the relevant state and federal rules," he said.

"Notwithstanding the legitimacy of party officials working in government relations, I agree with the Prime Minister that potential conflicts of interest, either real or perceived, need to align with community expectation."

Mr Abbott's decision will also affect the likes of former federal minister turned party official Santo Santoro in Queensland, as well as former Howard government minister Alexander Downer in South Australia.

The Prime Minister's comments could also explain why Arthur Sinodinos was overlooked for a Cabinet position.

Mr Sinodinos was chairman of a company called Australian Water Holdings before he went into Federal Parliament and it is now being investigated by the NSW anti-corruption commission for a government contract it won last year.

The company has financial links to Eddie Obeid, which Mr Sinodinos says he was not aware of.

It is a sour note for the Liberal Party, which has been riding high on the back of the tales of Labor corruption aired at the Independent Commission Against Corruption.

O'Farrell wants to improve transparency

Mr O'Farrell told Parliament this afternoon he had learnt the lessons from the former Labor government.

"We've sought to improve the rules governing lobbyists, including the introduction of a ban on so-called lobbyist success fees," he said.

"It's now a criminal offence in NSW for a lobbyist to be given a payment that's contingent on the outcome of the lobbying of a government official.

"I have said and I'll continue to say that those who do, those who think that they can get the key to getting a meeting or a favourable decision is by employing a lobbyist, is wasting their time and more importantly wasting their money."

Mr O'Farrell said earlier this week he instructed his department to prepare a further change to the NSW Lobbyist Code of Conduct to improve transparency and remove any perception or potential for conflicts of interest.

"I signed, Madam Speaker, this morning those changes from the 31st of October, people who occupy or act in a position concerned with the management of a registered political party, will not be eligible to engage in lobbying activities in New South Wales or to be registered as a lobbyist in this state," he said.

Mr O'Farrell also moved to protect his ministers from the scrutiny of an inquiry into ministerial propriety, widely seen as an attempt to shield his Community Services Minister, Pru Goward, who is been under relentless pressure over budget cuts and caseworker vacancies.