New South Wales has recorded 15 new coronavirus cases in the last 24 hours, all of which are linked to the Avalon (Northern Beaches) cluster – bringing the total cases linked to the cluster to 83.
It comes after the state recorded 30 new coronavirus cases yesterday, of which 28 were linked to the cluster.
NSW Premier Gladys Berejiklian says more than 38,000 people came forward for testing, a record number of tests for the state.
Sydney's Northern Beaches area went into lockdown at 5pm (local time) on Saturday and will stay in lockdown until midnight on Wednesday. For residents in the area, it means that they can only leave their home for essential purposes such as for work, for compassionate grounds, for exercise or to go shopping.
Restrictions in the Greater Sydney area were also imposed yesterday, with indoor venues now required to adhere to a rule of four square metres per person, private events limited to 10 people, and all other events capped at 300 people.
Berejiklian said today's drop in cases is pleasing, but it does not mean that Christmas festivities will go ahead as planned.
She said the key decisions on family gathering rules will come on Wednesday morning, because authorities needed to wait until the last possible moment to make a decision.
"Obviously, we have halved the number of cases overnight, but in a pandemic, there is a level of volatility, so we'll closely monitor what happens obviously to 8pm tonight and we'll be making a final call on Wednesday morning," she said.
"I appreciate how frustrating it is, and I would love to be able to tell everybody today what Christmas might look like in New South Wales or the Northern Beaches. But we're not in a position to do that yet."
NSW authorities issued a health warning last night for locations across Sydney as a mad rush to exit the city ramps up.
Sydney Airport was packed with travellers overnight as people rushed to flee the city. All Australian states and territories have moved to restrict their borders from NSW residents travelling from Greater Sydney.
NZ monitoring situation
The New Zealand Government says it is monitoring the new Covid-19 cluster in Sydney closely but it is too early to say if it will affect a transtasman bubble.
"As previously stated, a travel bubble won't start until the first quarter of 2021," a Government spokesperson said in a statement.
"Commencement is dependent on no significant change in the circumstances of either country.
"Decisions on whether or not to proceed with a travel bubble will occur in the new year and we will assess the situation at that point.
"We're monitoring the situation closely, but it's too early to make any decisions based on the current community cases in New South Wales."
Professor Michael Baker says New Zealand is arguably entering the "most dangerous stage" since the August Auckland outbreak and warns that the situation in Sydney "could be us".
"The main thing is this should be a huge wake-up call for us is that could be us today or tomorrow. We need that continued caution here," Baker said.
"It's quite a throwaway line but while we're on holiday, the virus isn't on holiday. The virus is behaving the way it's always behaved."
Baker said he wanted the Government to implement a traffic light approach to arrivals so those coming from the highest risk countries had more stringent quarantine measures.
Ideally, he would like those deemed high risk to isolate for about three days in a hotel under supervision and return a negative test before they even got on the plane to come to New Zealand.
Australian states and territories close to NSW
Sydney's outbreak has led to a rapid response from Australia's other states and territories. An overview of each:
Premier Daniel Andrews closed Victoria's border to NSW at midnight (local time) last night.
"I must announce on the best public health advice that from 11.59pm tonight we will declare all of Greater Sydney and the Central Coast a red zone," Andrews said.
According to Victoria's traffic light system, travellers from a "red zone" are not permitted into Victoria without 14 days in quarantine.
"If you're in Greater Sydney, stay in Greater Sydney," Andrews said.
"We are going to protect what we have built and that is why the border will be closed from midnight tonight."
The rest of Sydney is currently an "orange zone" and those travelling from there must get tested and isolate until they can produce a negative Covid-19 result.
Western Australia Premier Mark McGowan announced a hard border with NSW on Saturday, meaning that anyone coming into WA from NSW must seek an exemption.
If successful in gaining an exemption, they must self-isolate for 14 days and be tested for Covid-19 once in Perth.
"I know the changes are going to be hard for many people... This is not an easy decision to make," McGowan said.
Prior to this week, visitors to WA from all states and territories – except from SA – could arrive without having to apply for an exemption or quarantine.
Queensland has stopped short of shutting its border to NSW, but authorities say they are "already ready" to close the border if the premier makes the call.
All travellers from NSW are now required to fill out a border declaration when entering Queensland.
Anyone who has been in the Northern Beaches region on or since December 11 and is already in Queensland is required to get tested and quarantine at home or in accommodation until 14 days after the date they left.
Anyone arriving in Queensland from the Northern Beaches area after 1am on December 19 will be required to go into hotel quarantine at their own expense, and get tested.
Anyone from the NSW Central Coast or Greater Sydney area will be asked to get tested upon arrival in Queensland and isolate until they receive a negative result.
Anybody who has been in the Greater Sydney area will be required to complete 14 days of quarantine on arrival in South Australia, at home or in a hotel at their own cost. There is a "hard border" against anyone from the Northern Beaches.
Health officials are contacting anyone who has arrived in the state from the Northern Beaches area in recent days, who they will direct into quarantine. Anyone who has come in from other parts of NSW will require testing.
Tasmania has declared all of Greater Sydney to be a "medium risk" area, meaning travellers must quarantine for 14 days in their home, or if they are unable to, quarantine in a hotel at their own cost.
Premier Peter Gutwein said he "made no apology" for announcing the additional restrictions.
The Northern Territory declared Sydney's Northern Beaches a coronavirus hotspot and will require residents from the area enter mandatory, supervised quarantine.
People in Canberra are advised not to travel to the northern beaches region. People in the ACT who have been there since December 11 must self-isolate and get tested.
Additional reporting by RNZ