Bligh and O'Farrell said the MoU would reinforce the relationship between the two states by including all government services that were affected by cross-border issues, and covering the entire NSW-Queensland border.
The MoU goes beyond the current agreement, which only applies to areas such as healthcare, emergency services and transport in the Gold Coast-Tweed region.
The new agreement encompasses areas including policing, social services, primary industries, water and emergency management and response.
Bligh said the MoU ensured the Queensland government was implementing some of the Queensland Floods Commission of Inquiry's recommendations.
"In its interim report, released on August 1, the Commission of Inquiry recommended that the Queensland government work with its New South Wales counterparts to set up procedures for coordinating emergency responses on the Queensland-New South Wales border," Bligh said.
"For example, we will look at the use of governments' Air Wings for personnel, transport and freight into and out of flooded areas.
"The Commission of Inquiry also recommended that Queensland work with New South Wales to coordinate road condition reporting procedures to inform local councils and road users of interstate road conditions in a variety of different ways.
"During the January floods almost 70 per cent of our state was flood affected. In many cases travellers were stranded on either side of the border because they had not known the roads were cut – this had a huge impact on families and businesses.''
O'Farrell said the MoU continued a long history of cross border collaboration between NSW and Queensland to overcome the unique working and living arrangements for people living close to the border.
"There is a strong spirit of cooperation between our two states and this MOU is another sign of our shared determination to achieve positive outcomes for communities near the border," O'Farrell said.
"The MOU will formalise cooperation on strategic growth issues in key population centres and advance policy development and service delivery in the cross-border regions.
"Our ongoing shared response to the hendra virus outbreak is a practical demonstration of how closer cooperation will work.
"The MOU also provides for an annual meeting of the New South Wales and Queensland premiers to progress cross-border issues."
The MOU commits to involving other stakeholders such as local government and the Commonwealth government where required.