After Premier Mike Baird this week said he would partially relax the lockout laws applying to the inner Sydney, Labor leader Luke Foley said more needed to be done to encourage music and performance outside the lockout zones.

To that end, the Opposition is proposing a new class of liquor licence that allows venues to remain open past their regular hours, provided there was live music or other performances on the premises.

"There's a direct linkage: you encourage live performance, and longer licensing hours can flow from an increased focus on live performance," said Mr Foley.

Mr Foley said Labor was attracted to the scheme that had been applied to the Oxford Art Factory venue on Oxford Street. Under that system, the venue was allowed to remain open later, but only if it guaranteed performances.

"We are seeking to address the decline of live music venues over decades," said Mr Foley.

"The point here, I think, is that it's not all about the Cross and the CBD - we should be planning to boost nightlife across Sydney," he said.

Mr Baird said on Thursday the government would relax by half an hour the 1.30am lockout and 3am last drinks laws in Kings Cross and Sydney's central business district for live entertainment premises.

The government's promised changes, to be introduced as a trial, received a mixed response from opponents and proponents of the laws.

St Vincent's Hospital said the 10pm bottle shop closing time had stopped a "conveyor belt of carnage" and domestic assaults. The government is proposing to allow bottle shop sales until 11pm.

Anti-lockout advocates, meanwhile, said the half-an-hour relaxation in the venue restrictions did not go far enough.

Mr Foley's policy also includes the introduction of a "night mayor" charged with promoting late-night business across the city, as well as a general review of red tape for venue licensing.

"I think what Vivid showed is that nightlife is about a whole lot more than getting yourself full of drink and spewing up on the gutters of Kings Cross at three in the morning," he said.

Mr Foley added that people did not drink as heavily when there was entertainment to focus on.

For venues in suburban areas, Labor's plan creates the obvious possibility of conflict between residents and entertainment venues remain open later.

To address such conflicts, Mr Foley has proposed a mechanism requiring residents and venues to attempt to mediate disputes, rather than apply for court orders.

"We don't want to see local councils acting as the fun police," the Labor leader said.