Mr Barilaro - the member for Monaro who has been a vocal opponent of government plans to privatise NSW electricity assets  - will be appointed minister for small business and regional tourism.

Newly appointed NSW Nationals leader and Deputy Premier Troy Grant - who is hospitality and racing minister - will take on Mr Stoner's portfolios of trade and investment, tourism and major events and regional infrastructure and services.

Roads minister Duncan Gay will add the north coast to his portfolio responsibilities.

Mr Barilaro, a Nationals MP, is on a tight two per cent margin in Monaro and is being challenged by Labor's Steve Whan, who previously held the seat.

The Nationals are likely to be hoping his appointment to cabinet will help him retain the seat.

On Thursday, Mr Stoner announced he would resign immediately as leader of the NSW Nationals and Deputy Premier due to serious health issues affecting his family. Mr Grant was elected unopposed in his place.

Mr Stoner said he would remain in cabinet to continue work in his portfolios.

But in a surprise announcement on Friday morning Mr Stoner said he had changed his mind and informed Premier Mike Baird and Mr Grant of his decision.

"After talking with my family, I made this decision in order to allow me to spend more time at home in the immediate future whilst enabling the new leader of the NSW Nationals to stamp his own personal brand on the party in the lead up to the state election," Mr Stoner said.