A humble NSW Premier Mike Baird has performed an extraordinary backflip on his greyhound racing ban, admitting he and his government "got it wrong", the Sydney Daily Telegraph has reported.

Just three months after announcing on Facebook that he was shutting the entire NSW greyhound industry down after allegations of widespread cruelty, Baird revealed the extraordinary U-turn at a press conference on Tuesday, saying the industry was getting "one last chance".

"It's clear the community agrees that the cruelty must end but we underestimated the community's desire to give the greyhound industry one last chance to reform and conform to the highest standards of animal welfare," Baird said.

The Greyhound Racing Alliance, which has been instrumental in overturning the ban by outlining methods of reform, said it was "appreciative and thankful".

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Greyhounds have raced in NSW for 90 years. The industry is worth around A$350 million to the state and employs thousands of people - as well as acting as an affordable pastime to many more. "This has been a very difficult time for so many people whose lives were overturned by this ban," said Brenton Scott, boss of the NSW Greyhound Breeders, Owners and Trainers' Association.

"The ban was devastating for so many communities and families and we are thankful that the Government has listened and responded. We are now completely committed to making the people of NSW proud of their greyhound industry."

Former state premier Morris Iemma is being put in charge of a "greyhound industry reform panel" to find a way forward for the greyhound industry, with fresh legislation repealing the ban and a series of recommendations to improve the industry set to be tabled in early 2017.

The industry was facing a total wipe-out by July 2017 under Baird's previous plan.

The new recommendations are likely to include mandatory life bans and increased jail terms for people caught live baiting. Greyhounds will be registered for their entire lives, in order to keep a far tighter track on what happens to them.