But the NSW Premier has given fresh hope to year 12s, saying formals are 'Not cancelled, just postponed'.

More than 25,000 parents and students have signed an online petition calling on the NSW Government to reconsider its "unfair" and "unreasonable" ban on Year 12 school formals and graduations.

On Monday, the State Government declared school formals, dances, and graduations would be prohibited for the rest of term three.

Mother-of-three Debbie Terrantroy from the Central Coast said the new guidelines were "madness" and "terribly disappointing", prompting her to launch a petition on Tuesday.

The petition has since garnered thousands of signatures.

"It's just cruel … [The school formal] is a rite of passage that everyone deserves to have," Mrs Terrantroy said.

Her twin sons — Jackson and Harrison Wedesweiler, who attend Narara Valley High School and Lisarow High School respectively — have both had their Year 12 formals and graduation ceremonies cancelled.

"This year has been hard enough on them already and to take this away from them, especially when this can be done in a COVID-safe way, is just devastating," Ms Terrantroy said.

"It's just like another nail in the coffin".

Mrs Terrantroy urged the state government to consider alternative options for students, including staged graduation assemblies and formal dinners with no dancing.

"We're just asking for a graduation and Year 12 formal under the same regulations as a pub, club or wedding," she said.

"If you can have 150 people at a wedding, why can't those same regulations apply to formals and graduations?"

She felt it was particularly unfair for regional schools.

"You've got smaller schools in regional NSW which have 20 or 30 students and it's still a blanket ruling that they can't have a formal."

For many students, the new restrictions were announced during their Higher School Certificate trial exams.

"The government has been spending a lot of time talking about mental health during the coronavirus pandemic and then they thought it was OK to announce these decisions in the middle of HSC trials, when kids are already struggling with their mental health," Ms Terrantroy said.

For her 18-year-old son Jackson, the cancellation of his formal has been gutting.

"I was looking forward to my formal … 13 years of school and we're not going to be able to celebrate," he said.

Seventeen-year-old Hannah Graham from Ballina Coast High School in the state's north is also devastated she will be missing out on her school formal.

"I have been looking forward to the formal all year and wanted to party with friends and celebrate our time together — some I probably won't see again as people move away," she said.

She had already spent $700 on a dress after months of searching.

"My boyfriend, dad, mum and I made a special trip to the Gold Coast to look for dresses. I am pretty picky so when I found the one, I just knew.

"I was really looking forward to getting dressed up."

With the fate of school gathering in term four still undecided, Ms Graham is hoping her formal may still be able to go ahead.