NSW has reported its first death linked to the Omicron COVID-19 variant, as a Sydney pathology company owned up to a second massive blunder in as many days.
Some 6324 new infections were detected from more than 97,000 tests on Sunday, which is a drop of 12,000 on the number of tests processed the day before.
The number of tests results returned each day has progressively dropped by more than 60,000 over the past four days, as testing sites and laboratories become overwhelmed and wait times blow out amid reduced operating hours.
Adding to the mayhem, a Sydney pathology company has admitted its second mistake in as many days, this time saying almost 1000 people were told they were COVID-19 negative when in fact their results hadn't been returned yet.
On Sunday SydPath confirmed that more than 400 people who initially received a negative result on Christmas Day were notified on Boxing Day they had actually tested positive.
"The emergency response team investigating the cause of this error, has now identified approximately 995 more people, tested on 23 and 24 December, were prematurely sent an SMS advising them their test was negative when in fact their true result had not yet been determined," a spokesperson said in a statement on Monday.
"All of these people have been contacted and advised of the error."
The incidents were a result of human error at a time of unprecedented pressure, they said.
"SydPath have put procedures in place to ensure this cannot happen again."
NSW Health is urging people to only get tested if they have COVID-19 symptoms, are a household contact or have had a high or moderate risk of exposure, in an effort to ease pressure on testing clinics.
It comes as the number of people in hospital with the virus has climbed to 520 - having doubled in the past week.
Some 55 people are in intensive care and 17 are ventilated on Monday as the state reported another three deaths.
Among them was a man in his 80s who became the state's first Omicron death, NSW Health says.
The man acquired his infection at the Uniting Lilian Wells aged care facility in North Parramatta. He was fully vaccinated but had underlying health conditions.
Another man in his 80s and a woman in her 90s also died.
With infection rates rising, NSW has reverted to restrictions scrapped less than two weeks ago.
Hospitality venues return to the one person per two-square metre rule and QR codes are compulsory from Monday.
NSW Health Minister Brad Hazzard has also revealed the government is "in deep conversation" about lifting isolation requirements for health workers exposed to COVID-19 to stem looming staffing shortages.
They would wear fitted P95 masks and full personal protective equipment, Mr Hazzard said.
NSW Labor health spokesman Ryan Park says the testing chaos and hospital staffing woes are evidence of a government without a plan to manage the latest spike in infections.
He wants the government to lobby for support from the Commonwealth or other states, which during other stages of the pandemic has come in the form of extra nurses and defence force members.
More than four in five NSW residents aged between 12 and 15 are now fully vaccinated. This increases to 93.5 per cent for people aged 16 and over.