The hasty response comes after 60 demonstrators linked to the Nationalist Socialist Network assembled outside NSW parliament on Saturday.
They shouted Nazi slogans and unfurled a large banner with the slogan: "Abolish the Jewish Lobby".
Premier Chris Minns said he would aim to legislate laws cracking down on hate speech in coming weeks after attendees at the rally chanted "blood and honour", which is a Hitler youth slogan.
"The government is also exploring including (bans on) Nazi behaviour and speech alongside Nazi symbols to ensure there's no ambiguity about this horrifying behaviour ... and no suggestion launching a fascist protest on NSW streets will be tolerated," he told parliament on Tuesday.
The controversial protest permit system would be examined closely to ensure hate speech was not exempted while police would be again empowered to move on protesters outside places of worship, he said.
The suite of laws would send a "clear and unambiguous message that Nazis are not welcome in NSW".
But University of NSW law professor Luke McNamara cautioned such proclamations by governments oversell the capacity of criminal law to make sure society functions well.
"It's a mistake to expect that every time a new transgression happens, that it's necessary or appropriate to turn to parliament to create yet another version of a police power law or a criminal offence," he told AAP.
"Rather than play into that expectation that more law is the answer, we should stop, reflect and consider the totality of the issues."
Broad bans on protests outside places of worship were rushed through parliament in February, only to be struck out by the Supreme Court in October for infringing on political communication.
In similar haste in February, federal parliament mandated that anyone displaying a Nazi symbol be jailed for at least a year and for up to five.
Prof McNamara said he was troubled by the speed at which the Minns government was moving, adding it needed to be more evidence-based and measured.
While police decided against a court challenge to stop Saturday's neo-Nazi rally, they could have highlighted broader concerns for public safety, the professor suggested.
"Public safety is not just about volumes of people and crowd crushes, but can also be about the substantive effect of certain public utterances, signs and speeches that are made on a particular community," he said.
Prime Minister Anthony Albanese slammed the extremist protest for encouraging anti-Semitic hatred and division.
"This rise of people openly identifying as Nazis has no place in Australia," he told ABC Radio.
Mr Albanese criticised the NSW protest permit system after police were given a week's notice about the neo-Nazi rally but decided against taking it to court.
"The fact that these Nazis in NSW notified the police and were essentially given permission to conduct such a hateful activity is completely unacceptable," he said.
In a fiery question time, Police Minister Yasmin Catley defended top police brass as she painted the neo-Nazis as "grubs ... who know how to go right up to the line short of committing an offence".
Assistant NSW Police Commissioner Peter Thurtell apologised to newly installed Commissioner Mal Lanyon for not telling him of the protest, deeming it an oversight on his part.
Police sought legal advice about a potential court challenge but were told it would likely fail.
The communication breakdown had been described by federal MP Allegra Spender and Liberal state MP Kellie Sloane, both targets of violent sexual threats on social media from neo-Nazis, as a "complete stuff-up".
The politicians' overlapping electorates in eastern Sydney include large Jewish populations.
The same fringe group had rallied outside parliament in June when participants wore black uniforms and displayed a banner with the words "End Immigration".
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