The Berejiklian state government is preparing for a drastic overhaul of Sydney's night-time economy with more liberal drinking laws that go beyond lifting the controversial lockouts in the city centre.

The forthcoming report of a government-led inquiry will recommend scrapping rules that ban the sale of shots, doubles and pre-mixed drinks after midnight, and ditching restrictions on serving drinks in glass containers.

"Things have changed in five years": Premier Gladys Berejiklian says the lockouts should be relaxed or repealed. Credit:AAP

The committee will concur with Premier Gladys Berejiklian's view that the 1.30am lockout and 3am last drinks laws should be abolished in the CBD, and will likely recommend another review in 12 months to decide if those restrictions should also be lifted in Kings Cross.

Lockout laws would also be scrapped on and around the LGBTI hotspot of Oxford Street, reflecting a view among many committee members that the area should never have been included in the lockout zone.