Half of NSW's population could be infected with COVID-19 in the first wave of the Omicron variant, but the health system is faring better than even the most optimistic predictions, authorities say.
Another 63,018 COVID-19 cases were announced on Friday as the state works through a backlog of results from rapid at-home tests, which were only able to be reported from Wednesday.
About 60 per cent of the infections came from rapid tests, two thirds of them from within the last week.
However NSW Health has cautioned some cases are being counted more than once, from multiple rapid and PCR tests.
Chief Health Officer Dr Kerry Chant said authorities hoped cases will peak soon, but warned research indicates one in two people across the state may still get the virus during this wave of infections alone.
"Not all of those will have symptomatic infections or even know that they've been infected," she said.
However that still leaves half the population, she said.
That demonstrated why authorities are trying to slow the spread of the virus, allowing people more time to get booster shots.
The government has released modelling that shows the state is tracking better than expected when it comes to hospitalisations and ICU admissions.
Although NSW marked its deadliest day of the pandemic on Friday, with 29 lives lost, Premier Dominic Perrottet said the state is on an encouraging trajectory.
"We are currently tracking... better than the best case scenario," he said.
"It is going to be a difficult few weeks ahead, but the tracking that we are releasing today is very reassuring and encouraging."
The number of patients in hospital is still steadily climbing, now at 2525, but is expected to plateau next week.
Some 184 people are in intensive care, half of whom are unvaccinated, and 59 are ventilated.
Research released last week found that in a worst case scenario 6000 people could be hospitalised at the peak of the Omicron outbreak.
Some 600 of them would be in intensive care.
In the best case scenario, only 3158 people will be hospitalised and the number in ICU will peak at 270.
In comparison, at the peak of the Delta outbreak in September - when infections were a fraction of the current rate - there were 1266 people in hospital with COVID-19 and 244 in intensive care.
Under the best case scenario model, hospitalisations would be about two and a half times what they were at the Delta outbreak peak, but ICU admissions would only be up about 11 per cent.
But NSW Health Deputy Secretary Susan Pearce has warned the health system is still under immense strain.
"Behind every line and every dot on that page are people," she said.
"Please don't read that as meaning that our whole system is not under pressure."
Opposition Leader Chris Minns said Labor sounded the alarm on the health system in mid-December, and the premier should have been preparing for the expected surge in cases rather than dismissing their concerns as "alarmist".
"Instead, we're seeing our frontline workers who've already put in enormous amounts of effort over the last two years go through enormous stress in the last fortnight ... in order to keep our public hospital system operating," Mr Minns says.
Mr Perrottet also announced more close contacts would be able to return to work early if they have no symptoms of COVID-19.
Workers in utilities, IT, welfare, funeral homes and cemeteries, air and sea freight and logistics and prisons are now permitted to leave isolation if their employer determines their absence poses a high risk of disruption to the delivery of critical services, and they are unable to work from home.
Surf life savers, rescue volunteers and the media are also exempt, joining workers in agriculture, manufacturing, health, transport, postal and warehousing.