NSW has recorded its best drought figures in four years, with 40 per cent of the state now in drought - a 25 per cent drop from last month.

Minister for Primary Industries Steve Whan said the improved figures were due to the steady rain that fell across the state in recent months.

"The situation has not been this good since March 2006 - exactly four years ago," Mr Whan said.

"This year could certainly be one of the better years for farmer."

He said in January more than 81 per cent of the state was in drought.

Areas that moved out of drought this month include Cobar, Dubbo, Goulburn and Wilcannia.