Murphy, a Democrat who held the ambassador post under President Barack Obama after several years as a Goldman Sachs executive, said the agency would be called the Office of Immigrant Defensive Protection.
Murphy previously vowed to make New Jersey a sanctuary state if President Donald Trump ended the Deferred Action for Childhood Arrivals (DACA) program.
"DREAMers... are every bit as American as my four kids," he said at a debate with outgoing Lt. Gov. Kim Guadagno (R) in Newark.
"We will stand up to this president. If need be, we will be a sanctuary not just city but state. This is America... Mr. President, not in the state of New Jersey," he said at the time.
Murphy told the Post the new agency will be an office that undocumented immigrants could "call with questions about their status."
"The rumors that swirl around communities are extraordinary, and it’s literally hard to get, particularly if you’re undocumented, the right answer to your question. That’s when people go back into the shadows," he said.
Murphy added that he thought the term "sanctuary" had become tainted as a political "buzzword" - saying he preferred the term "welcoming."
The Post reported Murphy supports offering state identification, driver's licenses and education-related financial aid to illegal immigrants.
Salvadorean immigrants came to New Jersey and the U.S. seeking refuge - they’ve become our friends, neighbors, and colleagues. Ending TPS for Salvadoreans will tear apart families and do nothing to make our communities safer. #saveTPS
He said he also supports legalizing marijuana and raising the minimum wage, adding that he wants the Garden State to become a "progressive beacon."
His long-held opposition to the Trump agenda gained him headlines for comparing the New Yorker's presidency to Germany in the 1920s and opposing the tax reform bill.
Asked why he hasn't moderated from his left-wing views since his election against outgoing Gov. Chris Christie's (R) deputy, Murphy responded, "Let me tell you the secret. I believed what I said in the primary."
Murphy official takes office in Trenton on Tuesday.
