After months of scandal, New South Wales finance minister Greg Pearce has been sacked by Premier Barry O'Farrell for a breach of the Ministerial Code of Conduct.

Mr O'Farrell says Mr Pearce failed to declare a conflict of interest when making a Sydney Water board appointment in 2011.

He says Mr Pearce appointed lawyer Richard Fisher to the Sydney Water position and did not disclose that Mr Fisher worked with his wife Shauna Jarrett at the University of Sydney.

Mr O'Farrell says media enquiries brought the apparent conflict of interest to light, and has announced Ageing and Disabilities Minister Andrew Constance will stand in as the new finance minister.

John Ajaka is taking over Mr Constance's role as Minister for Disability Services, and picking up Mr Pearce's portfolio of the Illawarra.

Mr Pearce came under strong criticism after being accused of being drunk in parliament in June this year and of breaching ministerial travel rules.

Mr Pearce fronted the media after the allegations surfaced to announce he was taking leave to deal with stress and exhaustion.

The Premier says today's announcement is a reminder of the importance of maintaining the highest standards of government.

"Mr Pearce was clearly disappointed, he was clearly unhappy, but the fact is we have codes of conduct, we have them in place to ensure people act appropriately," he told the media.

He says unlike other recent scandals involving Mr Pearce, it was a clear-cut error.

"Here, there's no vagueness, there's no lack of clarity, here was a clear breach of the Ministerial Code of Conduct and I'm enforcing that Code of Conduct," he said.

Mr O'Farrell had previously released a statement saying Mr Pearce had been warned about his behaviour.

NSW Opposition Leader John Robertson says the sacking has come two months too late.

"This is a minister who's had very serious questions raised about his behaviour, about the use of taxpayer funds for weekend travel and board appointments," he said.

"Instead of sacking Greg Pearce two months ago, the Premier's been running a protection racket, protecting this minister by refusing to have these matters referred to the ICAC."