ACT Emergency Services Commissioner Georgeina Whelan declared the fire ban on Sunday afternoon.

The ban is set to span from midnight Sunday until 6am Wednesday.

"The fire danger rating for this period is predicted to be severe," Commissioner Whelan said.

"This means if a fire starts it will be difficult to control and will spread quickly.

"The ACT is well resourced and the current deployments to support NSW do not impact the level of fire protection to Canberra and the surrounding regions."

Other New Year's Eve events may also be cancelled as a result of the severe conditions, winds and the potential for smoke haze, but the stage entertainment in Civic Square starting around 6.30pm will proceed as planned.

Local and national artists have been engaged for an event which last year attracted a crowd of around 40,000 people.

Given the forecast, Events ACT executive branch manager Jo Verden advised the public to take care and plan ahead, noting ACT Health's current health advice around smoke haze and heat.

"It's disappointing that we can't bring the fireworks to Canberra this year but safety of the public remains a priority for providing a fun and safe event," she said.

"Events ACT is continuing to monitor weather conditions and smoke haze to determine if the other planned activities and live music performances can proceed without the fireworks."

It is the first time that the New Year's Eve fireworks have been cancelled in Canberra due to a total fire ban.

Martin Brady's Fireworks Australia was contracted to run the pyrotechnics. It was to have included two shows, one at 9.30pm and another at midnight.

The ACT government allocated $270,000 toward the celebrations which included the cost of the fireworks, staging, production, artists, and security.

"We always included the contingency that given the very dry and hot conditions, this [the fireworks ban] may occur," Ms Verden said.

"The government has paid for the fireworks so they will be kept in storage. There's no decision yet on what we will use them for but they won't be wasted."

She admitted the event had been robbed of a key attraction and this is likely to affect crowd numbers.

"It's reasonable to suggest that we may have a decline in attendance numbers this year but we will see how things go on the night," she said.

"We're hoping the people of Canberra will still come out for what promises to be a great night."

Conditions are forecast to be hot, dry and windy over the period, with temperatures predicted to reach 39 degrees, according to the Bureau of Meteorology.