David Jones, Coles Myer, Big W, Kmart, Target, Suzanne Grae, Cue Design are among 37 leading retailers in New South Wales who have signed an anti-sweatshop agreement designed to ensure their suppliers do not use exploitative work practices.

The new code of practice was brokered by the NSW Government's Ethical Clothing Trades Council, a body set up in May as part of the state Government's $4million, three-year strategy to end outworker exploitation.

Retailers who have joined the scheme are required to open their records for inspection by union and Department of Industrial Relations inspectors.

Lobby group Fairwear said the commitment was "a huge leap forward," but officials from the Textile Clothing and Footwear Union of Australia believe mandatory compliance and legislation in other states are needed for the code to be effective.