Hundreds of thousands of people will be confined to metropolitan Sydney as states harden borders with NSW and the state records 16 new local COVID-19 cases, many after a "super-spreader event".
Authorities moved quickly on Wednesday to suppress the rapid spread of the highly infectious Delta variant after the Bondi cluster blew out to 31.
Premier Gladys Berejiklian imposed immediate restrictions for Greater Sydney, the Central Coast, Blue Mountains, Wollongong and Shellharbour.
"Please abandon non-essential activities, please don't attend social gatherings unless you absolutely must," the premier said on Wednesday.
Later, during parliament's Question Time, the premier warned the government "will not hesitate to go further and harder if we have to".
Other states responded to the development swiftly, slamming the borders shut or imposing strict travel restrictions.
The outbreak has escalated dramatically since an unvaccinated Sydney airport limousine driver last week tested positive to the virus, which quickly spread at Bondi Junction's busy Westfield shopping centre.
From Wednesday, people who live or work in the City of Sydney, Waverley, Randwick, Canada Bay, Inner West, Bayside, and Woollahra local government areas cannot travel outside Greater Sydney unless absolutely essential.
The seven LGAs have also been deemed Commonwealth virus hotspots.
"We don't want the virus to spread to the regions," Ms Berejiklian said.
NSW recorded 10 locally acquired cases to 8pm on Tuesday, seven of which were already announced. An additional 13 cases were reported after 8pm, which will be counted in Thursday's official tally.
Four of these cases are not currently linked to existing cases.
Under other new restrictions, household visitors are limited to five people, including children, and masks are now compulsory in non-residential indoor settings - including workplaces - and at outdoor events.
Masks must also be worn to gym classes, which are limited to 20 people.
Eight of the 13 cases confirmed overnight were at a birthday party attended by about 30 people in West Hoxton on Saturday, which NSW Chief Health Officer Kerry Chant described as a "super spreader event".
An asymptomatic worker from Bondi Junction went to the party, as did a father and a daughter. The infected child then went to her childcare centre 60km southwest of Sydney's CBD on Monday.
Little Zak's Academy Narellan Vale has been closed for deep cleaning.
Dr Chant warned there were people "unknowingly" infected in the community and "a very real and present danger" existed across Sydney.
Joh Bailey's hairdressing salon in Double Bay - famous for its rich and famous clientele - was also added to the growing list of hot spots on Wednesday.
Four NSW Nationals MPs who attended a Paddington pizzeria on Monday night, meanwhile, are isolating after the venue was exposed to the virus.
NSW Health later on Wednesday also issued alerts for several bus routes, Nandos at Stockland Wetherill Park and two inner Sydney eateries.
The spike in infections is a blow for families as states harden their borders just two days before public schools break for two weeks.
WA closed its border to NSW entirely, while SA also closed its border with some exceptions and established a 100km border buffer zone.
Tasmania has banned travellers who aren't Tasmanian residents from the seven declared Sydney hotspots, while Queensland will lock out anyone from Greater Sydney, Central Coast, Blue Mountains, Wollongong and Shellharbour.
Victoria had already banned people from the "hot zones" and mandated that Victorians returning home from those areas must quarantine for a fortnight.
New Zealand has paused its travel bubble with NSW after a person infected with the virus flew from Sydney to Wellington and back.
NSW Health issued an alert for passengers travelling on Qantas flight QF163 on Friday night to Wellington, and anyone who flew on Monday morning on Air New Zealand flight NZ247 from Wellington to Sydney.
Australian Associated Press
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