The NSW premier says the community "can't live reasonably" with the Delta strain of COVID-19, implying Greater Sydney and surrounds will likely remain in lockdown until the current outbreak is significantly curtailed.
NSW recorded 38 new local COVID-19 cases in the 24 hours to 8pm on Wednesday, the highest number of daily infections since the pandemic's first wave.
This included at least 20 people who were in the community for part or all of their infectious period.
Almost 400 people have now caught COVID-19 locally since June 16.
Premier Gladys Berejiklian said her government had until now sought to be "bold and courageous" in the face of outbreaks by keeping NSW open, but the Delta variant had changed the equation.
Until a significant proportion of the population was vaccinated, the Delta variant could not be allowed to circulate, necessitating lockdown, she said.
Eleven people are in intensive care in NSW, with three ventilated.
Ms Berejiklian said residents of Greater Sydney and surrounds needed to further limit their movement and avoid mingling. She also called on eligible residents to urgently seek out vaccination.
About nine per cent of the NSW population is currently fully vaccinated, while the lockdown is scheduled to conclude next Friday.
"This new variant is a game changer - there isn't anywhere on the planet that has managed to live with this variant, the Delta virus, without having a proportion of the population vaccinated," Ms Berejiklian said.
"That is why it is so important for us to make sure that people follow the health advice."
NSW Health also confirmed on Thursday that a fifth aged care worker at SummitCare Baulkham Hills has come down with the virus, but was already isolating. Six residents to date have caught COVID-19.
Meanwhile, teachers and senior students in Greater Sydney and surrounds will be required to wear masks when they return to school next term.
Masks will be mandatory for all staff in all school settings, as well as students from Year 7 upwards when on-site learning resumes on July 19.
Ms Berejiklian also said she and treasurer Dominic Perrottet had discussed support for NSW workers and businesses with federal counterparts Scott Morrison and Josh Frydenberg, with an announcement imminent.
She said the Commonwealth had acknowledged "the success of our nation depends on the success of NSW (as) we have borne the burden during COVID".
"We are leaving the door open to receiving additional support so I want to stress that the conversations that we have had are ongoing," the premier said.
Authorities on Wednesday warned harsher restrictions could be introduced for communities in Sydney's southwest - particularly Liverpool, Fairfield and Canterbury-Bankstown - if COVID-19 continues to spread in the area.
Fairfield Mayor Frank Carbone told the Nine Network on Thursday he was concerned southwest Sydney was being unfairly targeted, saying "this isn't a Fairfield problem, I won't take anyone pointing a finger at Fairfield".
NSW Health issued nearly 20 alerts for venues of concern on Wednesday night, including supermarkets at Casula, Bonnyrigg, Maroubra and Revesby, petrol stations at Condell Park and Pagewood and a pizzeria at Waverley.
Business NSW estimates the lockdown is costing the state $1 billion a week and the state government will spend at least $1.4 billion on a small business package, with extended support understood to be forthcoming.
The federal government rejected NSW's request for the reinstatement of the JobKeeper wage subsidy scheme for the duration of the lockdown.
The Committee for Sydney in a statement on Thursday implored the federal government to change tack and urgently bring back JobKeeper.
Mr Perrottet was reportedly against Wednesday's lockdown extension.
