NSW Minister for Primary Industries Ian Macdonald announced on Friday that a large area of the state's red zone has been moved to amber.
"Today, almost half of the NSW Red Zone - about 4.5 million hectares - will be moved to amber zone status," he said.
"I want to make it absolutely clear that this is the single largest advance made on beating this disease since vaccine was introduced and the Iemma Government implemented its four-colour EI protection plan system zoning on September 23."
Eradication efforts to date had cost $A19 million, he said, adding that the state was now moving into the second phase of eradication efforts.
"We are running within the estimated budget and there is no doubt we have reached major milestones.
"Infection in NSW peaked on September 26 and since then has been steadily declining."
The minister said all or parts of the Coonamble, Moree Plains, Gwydir, Coonabarabran, Coolah and Dunedoo districts have now been changed to amber.
"Testing has provided us with confidence that these areas are free from disease and can now be moved back to amber zone status. This is great news for the thousands of horse owners in these regions."
The state, he said, will continue to revise zone boundaries and the second round of vaccinations is under way, targeting 18,000 plus animals.
Exhaustive proof-of-freedom testing along the north coast is expected to ultimately move 15 local government areas from amber to green status.
Vaccination of uninfected horses in the purple breeding zone remained a priority, he said.
He emphasised the ongoing importance of biosecurity and the need for people to adhere to the rules that apply in each zone.
Mr McDonald said his department was currently conducting testing at Wauchope, Berry, Walcha and Moree to resolve the status of infected properties and move further areas from red to amber.
Minister Macdonald said NSW was working with interstate and Commonwealth counterparts as well as industry and is confident the approach was working.
"Our intention has always been to contain the infection and ultimately eradicate it completely. This goal is reflected in our plan."
Breaking down the state, 60% of NSW is in the protected green zone, 29% is amber, 8% is red, and 3% is purple.
The NSW DPI Industry Liaison Group will be working with a range of industry organisations next week to develop procedures for the movement of horses across zone boundaries to attend competitions.
The group is also developing the necessary documentation procedures to demonstrate the immunity of horses that have either been infected with EI or vaccinated. This will be an important part of reviewing and modifying the movement guidelines for horses to cross zone boundaries to attend competitions.
Figures from Friday indicate that 5347 properties have been infected at some stage by the virus, with 469 considered "dangerous contact" and 486 suspect.
Queensland has had 2004 properties infected, an increase of 43 on the day before.