Only 30 per cent of year 12 students who are currently accepted into teacher education courses would make the cut under wide-ranging reforms announced by the state government.
The measures would eliminate an estimated 800 to 1000 HSC graduates from teaching degrees each year.
It would also be easier to sack underperforming teachers, who would then be de-registered.
The NSW Minister for Education, Adrian Piccoli, announced a range of initiatives on Wednesday that would restrict the entry of year 12 graduates into teacher education courses, based on their HSC marks.
Students would need to achieve marks of more than 80 in three subjects, including English, to be admitted into a university teaching degree.
Schools would also tighten restrictions on the number of students allowed to complete practical training.
Trainee teachers would also need to pass a literacy and numeracy test before their final-year professional experience placement in a school.
Once they had finished their course, university teaching graduates would need to demonstrate an "aptitude for teaching" to determine their suitability for entry into the profession.
Teachers who were found to be underperforming would be de-registered from the profession, which would prevent those working in the government system from moving into the non-government sector.
"It's a recognition that underperforming teachers have to be moved on," Mr Piccoli said.
"The department, the Catholics and independents will have to come back with implementation plans.
"If you are underperforming and you get sacked from the government system or the Catholic, you get deregistered."
The NSW Director-General of Education, Michele Bruniges, said the removal of teachers was too long and arduous and the department of education would look at streamlining the process. It also took up too much of the time of school principals.
"It's just not good enough the way it is at the moment," she said. "So we need to look at that."
The president of the NSW Board of Studies, Tom Alegounarias, said the new approach would for the first time describe a higher standard of competence expected of all teachers.
He said the higher standards reflected those expected of teachers in countries including Finland and Canada, which outperform Australia in international comparisons of student test results.
''It isn't, we hope, any more ... how bad to you have to be. It's how good is the minimum,'' he said.
The changes also include a greater emphasis on mentoring of new teachers and providing extra support for teachers to update their skills.
Restrictions on entry that are based on HSC marks will only apply to year 12 graduates and not to mature-age students who enter courses through alternative pathways.
Mr Piccoli said the changes would be funded through the NSW Department of Education's existing budget, and any requests for additional resourcing would need to be considered by the government.
The reform package would also restrict the number of graduating teachers to match demand.
A state government discussion paper called "Great Teaching, Inspired Learning" says in NSW last year, more than one in five entrants to undergraduate teacher education courses had ATAR scores below 60. Education was the least popular course for students with scores of 90 or above.
About 5500 students graduate from university teaching courses each year and the NSW Department of Education employs 300 to 500 new graduates, according to the government figures.