A New South Wales coroner has described fatal police shooting of a 22-year-old Sydney woman as a tragedy that could have been avoided.

Key points: Ms Topic was suffering from undiagnosed schizophrenia at the time

Ms Topic was suffering from undiagnosed schizophrenia at the time The officer who shot the 22-year-old genuinely feared for his safety

The officer who shot the 22-year-old genuinely feared for his safety The Coroner has recommended a major review of police training

Courtney Topic was shot dead by an officer while holding a kitchen knife outside a fast food outlet on the morning of February 10, 2015 at Hoxton Park in Sydney's west.

She died from a gunshot wound to the chest and the shooting was recorded on a taser camera by one of the officers involved.

Deputy state coroner Elizabeth Ryan said, due to undiagnosed schizophrenia, Ms Topic probably did not understand officer requests to put the knife down.

The court heard she was probably having a severe episode of psychosis on the day.

"Her family can still scarcely believe their daughter died in this terrible way," the coroner said.

Ms Topic's family sat up the back of the court crying as the coroner delivered her findings.

The coroner said the officer who shot her genuinely feared for his safety and the incident has deeply affected the three police officers involved.

Courtney Topic ( Supplied: Leesa Topic )

Ms Ryan said errors were made by the officers who dealt with Courtney Topic and she made 10 recommendations to the NSW Police Commissioner that include a major review of police training.

"Courtney's death exposed a compelling need for change," she said.

"If changes are not made there will be more deaths like Courtney's."

The coroner recommended that police are better trained in dealing with patients with mental health issues and that teams of first responders trained in "de-escalation techniques" are used where possible.

She also recommended better training for radio operators to try to identify signs of mental health disturbance when taking calls from police and civilians.

A police spokesperson said it would consider the recommendations "in detail" before commenting further.

Outside court her parents welcomed the coroner's findings but said they bear no ill feeling to the officers involved.

"With better resourcing, training and better application through the guidance of their police commissioner, fingers crossed this will never happen again," her father Ronny said.

Her mother Leesa said: "The commissioner has agreed to look at some of the findings … and we hope he is true to his word."

"Courtney is never coming home and we have to live with that forever."