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NSW appears set to become the first state in Australia to allow live kidney donations to complete strangers amid revelations an internet cult is encouraging its members to make "living sacrifices" to God.

A Health Department draft policy states that if the donor's motives are genuine and they have not been coerced, he or she can donate to the general public.

"Non-directed kidney donations are permissible provided all the requirements of this circular are met," the policy states.

Community and professional feedback is currently being sought over the measures, with an official policy expected to be put in place in the coming months.

The moves come amid the launch of an investigation by the Victorian government into allegations that members of the Jesus Christians cult lied to health authorities there so they could donate their kidneys to strangers.

Cult leader Dave McKay said he was aware of cases where members had "given the impression they have longer-term relations with a person than existed" and that was a "good thing" - but denied members were pushed to donate.

The incidents were reported to have taken place in Melbourne and Sydney.

NSW Health said it would investigate any suspicious donations, and added that its new policy should prevent such problems arising in the future.

"NSW Health aims to prevent inappropriate donations of kidneys by living persons through the development of its new policy in this area," a spokeswoman said.

While so-called "non-directed" donation is not strictly unlawful, it is not practised anywhere in Australia because of ethical considerations, except for at one Adelaide hospital.

As of March only one non-directed donation had been made at the Queen Elizabeth Hospital there, with another in the pipeline.

If the NSW policy is adopted it would provide clear statewide guidelines on the practice.

Concerns were raised in the development of the draft policy, with a consultation document noting that a "small but significant" group of potential donors had personality disorders.

It was also feared that some people would donate to get media attention or for other ulterior motives.

However, the draft policy determined that providing psychological tests were conducted on at risk potential donors and there was no monetary or other benefit non-directed donations should be allowed.

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