Sydney's status as a globally-engaged city can be rebuilt through the establishment of shorter home quarantine periods for vaccinated international arrivals, the NSW government hopes.
NSW recorded 1284 new local COVID-19 cases in the 24 hours to 8pm on Thursday and 12 deaths, including two women in their 20s.
It takes the toll for the current NSW outbreak to 222.
With NSW set to reach 50 per cent double-dose vaccination coverage on Friday, Premier Gladys Berejiklian said the state would later this month commence a seven-day home quarantine pilot program.
Of the 175 vaccinated participants, 50 will be Qantas flight crew.
The pilot would deploy similar facial recognition and geolocation technology used in recent home quarantine trials in South Australia.
Tourism Minister Stuart Ayres said the NSW government would rapidly scale up international arrivals if the pilot goes to plan.
Hotel quarantine arrangements will remain for the unvaccinated.
"We want to expand the amount of people who can come back to Sydney as quickly as possible, we want international tourists coming through Sydney. This is an important step for that - we won't hold caps a single day longer than we have to," Mr Ayres told reporters.
"Australia must reopen. We must get rid of lockdowns, we must get rid of home quarantine, we must re-engage with the world.
"Sydney is a global city and it must engage with the globe."
Ms Berejiklian added the pilot was "the start of a process" which in the longer term may result in the removal of quarantine obligations.
But she hoped home quarantine would help the more than 40,000 stranded Australians overseas return in time for Christmas, and enable Australians to visit family and friends overseas.
Committee for Sydney chief executive Gabriel Metcalf welcomed the plan, saying stranded Australians should be home by Christmas.
"It's time for us to start reopening - not all at once, but step by step. We can't stay closed forever and this is a very sensible next move," he said.
Qantas chief executive Alan Joyce also declared the plan a winner, saying the airline's flight crew - now all fully vaccinated - have spent months in hotel quarantine amid the pandemic.
They could now quarantine at home, significantly improving their lives.
Meanwhile, NSW Labor has called for more freedoms for outdoor exercise and recreation to be restored to western Sydney locals.
While up to five fully vaccinated people in different households can now meet outdoors outside the 12 council areas of concern, only two jabbed people in different households can do so inside those councils.
COVID-19 transmission is significantly reduced in outdoor settings.
"Spending a few hours outdoors at this very good time is a small way that families can try and get some enjoyment back," opposition health spokesman Ryan Park said in a statement on Friday.
Elsewhere, a man has been charged with the serious assault of another man at a drive-through COVID-19 testing clinic in Auburn.
The 18-year-old man allegedly pulled the 55-year-old male victim from his car and punched and kneed him before driving away.
In the regions, Albury and Lismore were sent back into a week-long lockdown on Thursday after reporting local COVID-19 cases.
Glen Innes Severn council area will also go into seven days of lockdown from 6pm Friday due to a COVID-positive person in the community.
They are likely to be followed by Young after new COVID-19 cases in the town, but NSW Health is yet to make a formal decision.
There are 1245 COVID-19 patients in NSW in hospital, with 228 patients in intensive care units and 112 on ventilators.
Some 18 people have also been diagnosed with COVID-19 across three social housing buildings in inner Sydney's Redfern. A mobile vaccination team is visiting each tower building to provide vaccinations.
