NSW could suspend elective surgery and draft in private hospitals to help relieve pressure on the hospital system, after the state recorded another 34,994 COVID-19 cases.
The new cases were identified from 111,231 tests in the 24 hours to 8pm on Wednesday. About 31 per cent of the tests were positive.
NSW on Thursday also reported six deaths including a vaccinated and otherwise healthy ACT man in his 20s who died at Sydney's St Vincent's Hospital.
The other fatalities were four men and a woman aged in their 60s, 80s and 90s. Two were from Lake Macquarie in the Hunter Region and three from western Sydney.
The number of people in hospital (1609) and intensive care units (131), as well as those on ventilators (38) also rose.
Premier Dominic Perrottet warned the state may suspend elective surgeries to relieve pressure on the hospital system.
Private hospitals could also be asked to help "in managing ... these increases in cases", he said.
Australian Medical Association NSW president Danielle McMullen said the indication elective surgery could be cancelled was "yet another sign of a system in crisis" and suspending surgeries was an "avoidable" move that "will have profound consequences for patients".
"Elective surgery shouldn't be a tap that government turns on and off to cover for serious cracks in our healthcare system," Dr McMullen says.
Many of NSW's testing sites and pathology labs are also under strain due to high demand.
Mr Perrottet said the testing system was at full capacity and it will take time to relieve the pressure as people adjust to new testing guidelines.
Under changes approved on Wednesday by national cabinet, people who test positive after a rapid antigen test won't have to get a PCR test to confirm the result.
Employers should also stop asking workers to get PCR tests when they are asymptomatic.
"Given the current strain on the system, (PCR tests) are taking days to come back, so the (need) as we move forward for employers to be saying that to employees, is very, very low," the premier told Sydney radio 2GB.
Opposition Leader Chris Minns said NSW is in a crucial period where it needs to protect the hospital system and find a way to monitor the prevalence of the virus in the community as testing shifts predominantly to RAT kits.
"The government still needs to be aware where those cases are popping up so that resources can be deployed," Mr Minns said.
Health authorities could be left "flying blind" if there was no way for people to self report their results from RAT kits, he said.
Unlike PCR tests, RAT results are not registered.
The AMA is meeting with NSW Health on Thursday to establish how infections detected under the kits will be tracked.
Some of the 50 million RAT kits recently ordered by NSW will begin arriving next week.
They will be distributed in conjunction with the federal government through pharmacies and "potentially in testing centres and vaccination hubs", as well as to frontline staff in schools, Mr Perrottet said.
The federal government still faces calls to provide RAT kits for all Australians following the announcement they would only be provided free to six million concession cardholders across Australia, with each person able to get 10 over the next three months.
Australian Medical Association NSW chair Michael Bonning said providing some free tests did not go far enough.
"We need more rapid antigen tests in the community so that people can be making good choices about activity, but also detecting disease early so that then they can stay away from others," Dr Bonning told Nine's Today program.