A world-first residential treatment centre in NSW will be a "place of healing" for children whose loved ones have been murdered.

The centre, to be managed by fellow victims, is named after Grace Lynch, the mother of Sydney nurse and beauty queen Anita Cobby, who was raped and murdered by a gang of men in Sydney's west in 1986.

Ms Lynch became a powerful advocate for victims of crime after her beloved daughter's brutal murder shocked the nation.

Grace's Place, to open in Doonside, will provide accommodation, counselling and other support for 12 children and their carers from early next year.

The $9.4 million centre was jointly-funded by the NSW and federal government, with $6.1 million invested by the Commonwealth and $3.3 million by the state.

Traumatic events significantly impact young people's wellbeing and half of all mental health challenges tended to emerge before the age of 14, Assistant Mental Health Minister Emma McBride said on Monday.

"The federal government is proud to invest in a world-first centre like Grace's Place alongside the NSW government to make sure children have the care and support they need to support their mental health and wellbeing as they recover from trauma."

NSW Attorney-General Mark Speakman said Grace's Place would be a place of healing, where children who had lost family members to murder could get counselling and ongoing therapeutic programs, as envisioned by Ms Lynch.

"Grace, along with her husband Gary, provided tireless, caring support to many families of homicide in the years following their daughter's tragic death," Mr Speakman said.

"It is fitting that this wonderful facility is named in her honour."

The centre will be managed by the Homicide Victims Support Group, which was founded by Ms Lynch and her husband Gary Lynch, along with Christine and Peter Simpson, whose nine-year-old daughter Ebony was murdered in 1992.

The support group will also set up its head office in the centre, and will offer training and information to members of the public, police and other professionals about the needs of victims of murder.