Federal Labor Party leader Anthony Albanese and his state counterpart Jodi McKay have announced a review into the state party's head office, saying something is "fundamentally wrong" with the current culture.
The review - to be headed by former commonwealth attorney-general Professor Michael Lavarch - comes after details of NSW Labor's latest donations scandal were laid bare by the anti-corruption watchdog.
An Independent Commission Against Corruption hearing has heard evidence that $100,000 was illegally donated by a property developer.
The ICAC was told Chinese billionaire Huang Xiangmo took the cash in bundles of $100 notes in an Aldi bag to NSW Labor's head office in April 2015.
As she announced the review on Sunday, NSW Labor leader Jodi McKay said it was clear that as things stand there is "far too much power and responsibility vested in the general secretary".
"There has been some shocking and appalling evidence that has arisen from the ICAC hearing," she told reporters in Sydney.
Ms McKay said the first stage of the review would look at the role and responsibilities of the general secretary, while the second would focus on head office mechanisms which she labelled as "lax and deficient".
"It is clear that we need to let the sunshine into our head office and I have been distressed by the evidence that has emerged," she said.
"It's clear there is a cultural problem within head office ... and we need to address that and that's the commitment we're making today."
The explosive evidence uncovered at the ICAC inquiry into illegal donations led to the dumping of NSW Labor's general secretary Kaila Murnain in August.
Ms Murnain told ICAC that in September 2016 upper house MP Ernest Wong told her Huang Xiangmo - who was a prohibited donor - had donated to the state Labor party and she'd failed to act on that information.
Ms McKay said NSW Labor would not be appointing a new general secretary until the review is complete.
"There will be no appointment ... until we have a firm definition around the roles and responsibilities and indeed how this position works within the broader party structure," Ms McKay said.
Labor leader Anthony Albanese said party officers had let the membership down and the review was needed to bring lasting reform.
"There is something fundamentally wrong when people running a political party office think it's normal to behave in this way," he said.
"The overwhelming number of people in our party who go out there and sell two dollar raffle tickets, who volunteer, who work for the community ... are let down when circumstances occur that have been revealed by the ICAC.
Mr Albanese said they expected the first set of recommendations will be brought down "in about a month".
The Labor leader dismissed the idea of moving the party's state headquarters from their base at Sussex Street, saying "what we need is substantial change not symbolic change".