New South Wales is one of the states of Australia . New South Wales ( abbreviated as NSW ) , is Australia 's most populous state , and is located in the south-east of the country , north of Victoria , south of Queensland , east of South Australia , west of Jervis Bay Territory and encompasses the whole of the Australian Capital Territory . The colony of New South Wales was founded in 1788 and originally comprised much of the Australian mainland , as well as Van Diemen 's Land , Lord Howe Island and Norfolk Island in addition to the area currently referred to as the state of New South Wales , which was formed during Federation in 1901 .