They also need to prove they had no role in producing the recordings, in a renewed move to nab criminals and crooked public servants.
The reforms, which passed NSW Parliament on Thursday, extend and enshrine an existing temporary exemption for the state's corruption watchdog to police and other law enforcement.
An initial proposal to extend it to investigative bodies at large was opposed by the coalition.
The legislation strengthened the state's Independent Commission Against Corruption by allowing it and other bodies to rely on evidence it would otherwise be impossible for them to use, NSW Special Minister of State John Graham said.
"New technology changes the nature of evidence that is collected in the community," he said on Friday.
"We have to allow ICAC to keep up, by using the best evidence available."
Opposition spokesman Damien Tudehope said the government's initial proposal for the reforms would have encouraged a "nosy neighbour" to illegally record and disseminate conversations.
The opposition argued it would have given every investigative body in NSW, including local councils, the ability to use illegal recordings, and proposed investigators apply for warrants to acquire them instead.
"If unlawfully obtained evidence is going to be used, at the very least a basic check and balance should also be there," Mr Tudehope said on Friday.
"ICAC already holds temporary powers to use such recordings until the end of 2026. There was no urgency that justified ramming this through the parliament."
ICAC has had permission to use illegal recordings since 2023, from its probe into the alleged stacking of a Liberal-held Sydney council in order to influence planning decisions linked to fugitive developer Jean Nassif.
Back then, the opposition attempted to wind back the powers, limiting them to one investigation over concerns it would give the commission "open slather" to use any illegal surveillance it acquired.
The Greens, who joined the coalition in opposing the initial bill, sought to raise the threshold at which police could tap into illegal recordings to cases of serious crime.
"These amendments strike a careful balance between protecting the public from abuse of surveillance powers and ensuring that corruption and misconduct can still be exposed and investigated", Greens spokeswoman Sue Higginson said on Friday.
Similar laws protecting handlers of illegal surveillance exist in Western Australia, Victoria and the Northern Territory.
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