NSW has recorded its first death linked to the Omicron COVID-19 variant, amid a surge of cases that has seen the number of people hospitalised across the state double in the past week.
Some 6324 new infections were detected from more than 97,000 tests on Sunday, with the state also reporting another three deaths.
Among them was a man in his 80s who became the state's first Omicron death, NSW Health says.
The man acquired his infection at the Uniting Lilian Wells aged care facility in North Parramatta. He was fully vaccinated but had underlying health conditions.
Another man in his 80s and a woman in her 90s also died.
While new cases dropped by 70 from the previous day, the number of people hospitalised has doubled in the past week.
A total of 520 people are in hospital, 55 of them in intensive care and 17 ventilated.
The number of tests processed decreased by more than 12,000 compared to the day before.
The number of tests results returned each day has progressively dropped by more than 60,000 over the past four days, as testing sites and laboratories become overwhelmed and wait times blow out amid reducing operating hours.
"To ease pressure on testing clinics, we encourage you to only get a PCR test if you do have COVID-19 symptoms, or you are a household contact, or have had a high or moderate risk exposure to COVID-19, or have been directed to be tested," NSW Health's Christine Selvey said.
However interstate travellers requiring a PCR test are still able to get one.
Adding to the state's coronavirus concerns are hundreds of people who received false negative test results on Christmas Day.
More than 400 people who initially received a negative result on Christmas Day were notified on Boxing Day they had actually tested positive.
St Vincent's Hospital in Sydney is investigating the incident, believed to be a result of human error.
With infection rates rising, NSW has reverted to restrictions scrapped less than two weeks ago.
Hospitality venues return to the one person per two-square metre rule and QR codes are compulsory again from Monday.
NSW Health Minister Brad Hazzard has also revealed the government is considering lifting isolation requirements for health workers exposed to COVID-19 to stem looming staffing shortages.
"I'm certainly in deep conversation over probably the last week ... about whether or not it's viable to have staff coming back sooner," he told reporters on Sunday.
They would wear fitted P95 masks and full personal protective equipment, Mr Hazzard said.
"If you're erring on the side of caution... you could say probably this would be a safer option than having no staff," he said.
NSW Labor health spokesman Ryan Park says the testing chaos and hospital staffing woes are evidence of a government without a plan to manage the latest spike in infections.
"People being turned away after waiting for five and six hours to get tested is not good enough," he told reporters.
"People waiting days and days and days for their test results to come back is not good enough.
"Saying everyone's going to get Omicron is not good enough."
He wants the government to lobby for support from the Commonwealth or other states, which has come in the form of extra nurses and defence force members at other stages during the pandemic.
More than four in five NSW residents aged between 12 and 15 are now fully vaccinated. This increases to 93.5 per cent for people aged 16 and over.
Australian Associated Press