NSW has recorded 2,566 new Covid cases, setting another daily record for new infections.
In the past 24-hour period, a massive 148,937 tests were processed by NSW Health as concerns grow about the spread of the Omicron variant during the Christmas period.
Sunday's figures are a slight increase on the 2,482 new cases reported Saturday and the 2,213 cases reported on Friday.
As of Sunday morning, 227 people are in hospital in NSW with Covid, with 28 in the ICU.
Despite the official relaxation of rules, health authorities "continues to remind everyone across the community to continue to practice Covid-Safe behaviours, including wearing a mask in settings where you cannot physically distance," NSW Health said Saturday.
Some 93.4 per cent of people aged 16 and over in NSW are now fully vaccinated, while 78.1 per cent of those aged 12-15 are double dosed.
Meanwhile, Victoria reported 1,240 new Covid infections Sunday.
Omicron behind 'rapid escalation' of Covid spread
Speaking to reporters in Canberra on Sunday morning, Deputy Chief Medical Officer Dr Sonya Bennett said while there was still a lot to learn about the Omicron variant, it has become clear the strain is more transmissible.
"There's still a lot of uncertainty, particularly with respect to how severe we think Omicron might cause disease," she said.
"But what we do know, and what has become clear, is it is highly transmissible. So we are seeing rapid escalation of case numbers around the globe, particularly in the UK, with the UK recording over 90,000 cases yesterday. We are seeing case numbers rise here ourselves in NSW.
"So it is highly transmissible and appears to rapidly escalate what's called the doubling time of around two days, which is obviously concerning."
Dr Bennett implored people to keep wearing masks to blunt the spread of the virus, despite states like NSW repealing such mandates.
"I think we know mask mandates work. We know mandates work generally. But I think my plea to the community is we don't need to wait for mandates to tell us what is sensible to do. That particularly applies to masks," she said.
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