St Vincent's Hospital in Sydney has launched an emergency response after informing 400 people they had incorrectly received negative Covid-19 test results.
"SydPath last night incorrectly messaged more than 400 people, advising them they had tested negative to Covid," a Boxing Day statement read. "These people had tested positive to Covid."
"As soon as we became aware of the issue this morning, SydPath immediately commenced a process to contact impacted people.
"An emergency response team is now investigating the cause of the mistake, which is believed to be human error.
"We sincerely apologise to all those impacted."
There are fears some of the owners of the now reversed tests are on board yachts racing in today's Sydney to Hobart.
It comes as NSW Health Minister Brad Hazzard warned "we're all going to get Omicron", as cases in the state hit a new high of 6934 infections.
It comes after the state set a previous record of 6288 infections on Christmas Day, up from 5612 on Friday.
Hazzard on Sunday urged people to get vaccinated and warned everyone would come into contact with the Omicron variant.
"Bottom line here is that we would expect that pretty well everybody in NSW at some point will get Omicron," he said.
"And if we're all going to get Omicron, the best way to face it is when we have full vaccination including our booster.
"The challenge for us in the state is to make sure that our health system can cope."
There have been no new Covid-related deaths, but the latest figures released on Boxing Day have revealed there are 458 people in hospital with the virus, with 52 of those in intensive care.
The number of hospitalisations – which is the way NSW Premier Dominic Perrottet says the virus risk should be measured – is an increase of 70 people from the data released on Christmas Day when there were 388 in hospital.
However, the number of people in ICU has remained the same.
"It's very clear from ICU presentations that the majority of people who are in ICU are unvaccinated," Perrottet said.
An impressive 109,545 tests were conducted in the 24 hours to 8pm on Christmas Day despite major queues and reports that some people were turned away.
The state also hit its first dose vaccination goal of 95 per cent coverage on Saturday.
Meanwhile, Victoria recorded a drop in infections on Boxing Day with 1608 new coronavirus cases and two deaths.
That is less than Christmas Day when the state recorded 2108 new Covid cases and six deaths.
South Australia recorded 774 new cases of Covid, with the "vast majority" Omicron.
In the ACT, 71 new cases were reported on Boxing Day, around half of the cases reported a day earlier.
Queensland also recorded a drop with 714 Covid-19 cases, down from 765 on Christmas.
Tasmania hit a new record for cases on Sunday, with 44 new infections.
In Sydney, large crowds gathered at beaches for Christmas to beat the heat after being encouraged to celebrate the day outdoors to reduce risk of spread.
NSW has introduced a number of new restrictions for the holiday season to try and stem the spread of Covid.
People are now required to wear masks indoors until January 27.
QR code check-ins at retail stores and hospitality venues have also been reintroduced from Monday.
But there were issues with testing queues for Christmas with Randwick's mayor Dylan Parker speaking out about reports he had heard that clinics were in "meltdown".
"Hundreds of people waiting in line for several hours with multiple drive-throughs shut," he posted on Facebook
"Reportedly now Prince of Wales hospital is no longer accepting walk-ins as the line is too long.
"This mess was totally foreseeable."
Parker said that all three of Randwick's regular drive-in clinics were closed on Christmas Day, adding stress to ones that remained open as people sought tests for travel and ahead of gatherings.
A spokesman for Prince of Wales denied that people had been turned away but admitted that lines were long.