Discussions about a person's sexual orientation led by their grandparent, partner or sibling would be explicitly exempt from NSW laws banning gay conversion therapy, under a coalition proposal.
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MPs - many begrudgingly - will burn the midnight oil on Thursday night in a bid to pass the conversion therapy ban, demanded by Equality Australia and other leading LGBTQI advocates.
Under the legislation, a new criminal offence of delivering a conversion practice will carry a penalty of up to five years in jail.
While it supports a ban, the coalition is uneasy about a list of exceptions and whether they go far enough to protect families' ability to discuss sexuality and gender matters with children.
The opposition on Thursday afternoon proposed expanding a parental exemption to "near relative" covering grandparents, siblings and spouses.
Another proposal would prevent near relatives and people aged under 18 who engage in gay conversion from being sued.
The Greens are expected to move amendments to prevent religious leaders using homophobic or conversion language in sermons.
Personal prayer and reflection would remain protected.
When announcing the proposed laws last week, Attorney-General Michael Daley said they would not infringe on preachers saying to a group "in our faith, being a homosexual is wrong".
Greens MP Amanda Cohn, who is bisexual, said those sermons can be harmful and are a source of recurring trauma for many LGBTQI people of faith.
Victim survivors - numbering in their thousands - had emphasised language used in sermon "can plant the seed in a person's mind that they are broken" and caused some to seek conversion practices, Ms Cohn said on Thursday.
The government bill was developed through extensive consultation with 150 stakeholders.
Faith communities have been broadly supportive, though Christian Schools Australia said the defined civil scheme would green light "activist litigation designed to target the long-held beliefs of people of faith regarding marriage, gender, and sexual morality".
Several right-wing MPs will try to strip the bill of all references to gender identity, restricting the ban to conversion practices based on an individual's sexual orientation.
Independent Alex Greenwich, who led the charge in parliament to have conversion therapy outlawed, has warned fellow MPs against using divisive and harmful language during debate.
The upper house earlier narrowly agreed to sit beyond 10pm to vote on the bill and others.
Opposition leader Damien Tudehope pointed out the upper house had pulled up stumps repeatedly before 7pm including a day last week at 4.16pm due to a lack of government business.
The longer sitting will also allow passage of legislation to harden bail laws, in response to youth crime in regional areas.
Outspoken Labor backbencher Cameron Murphy said the changes would "inevitably send more Indigenous kids to jail" while Greens MP Sue Higginson said the "wicked laws" were "grossly conceived".
Meanwhile, the parliament passed a stronger fine regime for environmental crimes and extra powers for the regulator.
On-the-spot littering fines rise to $160 while the most serious dumping offences will double to $10 million for companies.
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