The trial, which will be devised by a working party, will report back to the government by the end of the year, Premier Mike Baird announced on Tuesday.

Unveiling the government's much-anticipated response to the issue during question time, Mr Baird also said the existing NSW police discretion to not charge terminally ill adults if they are caught using cannabis for pain relief would be formalised through new guidelines.

It is understood that, as part of the change, a register of terminally ill patients and their carers would be established.

The government would also begin discussions with the the federal government about putting the issue of medical use of cannabis on the national research agenda.

"We want to give the terminally ill and those around them - their carers, their family - greater peace of mind," Mr Baird said.

"We also want to ensure carers aren't forced to watch their loved ones suffer when their pain can be alleviated."

Mr Baird said the clinical trial would "explore further the role cannabis can play in providing relief for patients suffering from a range of debilitating or terminal illnesses."

He said the "senior working group" would consider the scope of the trial and advice from experts "to find the best way to advance the availability of effective cannabis use".

"I hope the proposed government sponsored clinical trial will support high quality medical research and bring some clarity to this area to enhance our understanding of the application of the medical use of cannabis," Mr Baird said.

The issue gained momentum earlier this year when Nationals MP Kevin Anderson announced he would introduce a private members bill to legalise cannabis for medical use.

One of Mr Anderson's constituents, 24-year-old Dan Haslam, has been using cannabis to relieve nausea associated with chemotherapy to treat his terminal cancer.

Mr Haslam's mother, Lucy, was in the public gallery to hear Mr Baird's announcement.

Mr Baird said he met with Mr Haslam and his family on July 21. Mr Haslam explained that the use of cannabis could reduce pain and nausea.

"And if he eats, he's got the capacity to fight," Mr Baird said. "If he has the capacity to fight he's got the opportunity to spend more days, more weeks, with those who love him most."

Mrs Haslam said she and her family were "thrilled to see the government has listened to the overwhelming support for decriminalising medicinal cannabis".

However, she noted there was "a long way to go. Legislation to regulate the supply and distribution process will still need to come forward, and there's steps the federal government needs to take, too.

"But this is the start of a new era in Australian drug policy."

Earlier on Tuesday, Labor announced it would offer bipartisan support for the legalisation of cannabis for medicinal use in NSW. It promised to take the policy to next year's election if the government did not change the law beforehand.

Labor supports two key recommendations of the select committee into the use of cannabis for medical purposes, which reported in May last year.

One was that the government amend the Drug Misuse and Trafficking Act to add "a complete defence" to the use and possession of cannabis for medicinal purposes.

The other was that a register of "authorised cannabis patients and carers" should be established.