A number of unofficial flags existed in the early days of New South Wales. Following the adoption by the British Parliament of the Colonial Naval Defence Act in 1865, each colony was required to display the British Blue Ensign with a unique, easily distinguished colonial badge. From April 20, 1870, until February 1876, the New South Wales badge was simply the letters NSW in white on a blue background. A different design, showing the Southern Cross in gold stars below the royal crown, appeared on the flag of the governor. British authorities strongly recommended that a single badge be used for both purposes.
As a result, the design in use today was developed by James Barnet, architect of the local colonial government, and Captain Francis Hixson, president of the Marine Board. The badge was designed as a white disk with a red cross (the Cross of St. George) bearing a yellow lion and, on each arm of the cross, an eight-pointed yellow star. The Cross of St. George and the lion undoubtedly referred to ties with England, the mother country, while the stars represented the Southern Cross, already long recognized as an Australian national symbol. The red cross on white may have been taken from the White Ensign of the Royal Navy. This new flag flew on government ships, but it has been little used since New South Wales became a state on January 1, 1901. Nevertheless, it continues to be the official state flag of New South Wales, and both the state coat of arms and the personal standard of the governor are based on its badge.