The red zones surrounding Berry and Wauchope have been revoked after confirmation that both areas are now free from equine flu, said NSW Primary Industries Minister Ian Macdonald.
However, those in the Grenfell area are on alert after authorities confirmed its spread.
Deputy chief veterinary officer Steve Dunn said surveillance teams are continuing tracing efforts to determine how the virus entered the district.
"To help us eliminate this latest outbreak quickly it is vital that anyone in the Grenfell area with horses showing any possible signs of horse flu contact the EI hotline or their local vet," he said.
"We are confident we can contain and eradicate the virus as long as we can rely on people who have contact with horses to exercise biosecurity and advise DPI if they see any signs of EI among local horses."
Vaccination of horses in the vicinity of the infected Grenfell properties will begin on Saturday.
The declaration that Berry and Wauchope are EI-free follows exhaustive investigations and testing of horses over the past six weeks, said Minister Macdonald.
"Red Zones established after EI was detected in both areas have now been changed to Amber, freeing up some movement restrictions, easing disinfection requirements and allowing the resumption of some horse racing events.
"Testing for horse flu has cleared every horse on the infected properties and all horses that have been in contact with infected animals since the outbreak.
"In the Berry region alone, investigations involved interviewing 1500 property owners within a 5km radius of the infected property.
"This is a sign of things to come throughout infected areas during the recovery phase.
"Every infected region will also need to go through comprehensive tests and meticulous investigations to demonstrate their freedom from EI."
NSW chief veterinary officer Bruce Christie stressed that movement restrictions and biosecurity standards still need to be maintained throughout NSW if flu is to be controlled and eradicated.
"This is a small but significant step in the marathon battle to eradicate horse flu from NSW, but I want to make it absolutely clear that we have a way to go," Mr Christie said.
"Every person in NSW who comes into contact with horses still has both a moral and a legal responsibility to play their part.
"All it takes is one for person to carry the extremely contagious equine influenza virus to a horse property in a clean district and we will be starting all over again."