The Renwick State Ward Home, part of the former Mittagong Farm Home, will be placed on the NSW Heritage Register.
Heritage Minister Robyn Parker said the home had social and historical significance.
"Renwick State Ward Home is a key element in the chronological development of major state-run child welfare institutions in NSW," Ms Parker said.
It was the first building at Mittagong Farm Home to be designed by the Government Architect's office and was completed in 1941.
Ms Parker said thanks to its size and unusual architectural style, the building and its landscaped setting had landmark qualities.
Renwick State Ward Home, one of approximately a dozen cottages on the Mittagong Farm Home site, provided dormitory-style accommodation for state wards and children who had been removed from their families.
It was used as a home until 1994.
Ms Parker also recognised the role of the Renwick Association in seeking the listing.
"The commitment of the Renwick Association, and particularly its president, Leeallison Downie, to recognising this significant part of our state's heritage is acknowledged and congratulated," Ms Parker said.