Sydney's daily coronavirus cases spiked to a new record high - the state of New South Wales recorded 919 new infections in the past 24 hours.
Officials have warned that hospitals in the western suburbs of Sydney - the epicenter of the outbreak - are under pressure.
New South Wales premier Gladys Berejiklian urged more people to get vaccinated to ease the strain on the health system.
"We have made the point, most important figure moving forward is the rate of vaccination and that remains the case.
As soon as we hit all those milestones, we will have those extra freedoms."
Despite enforcing two months of lockdowns, Sydney is grappling to contain the most recent Delta variant outbreak.
Police have been deployed on the streets to enforce social-distancing rules as the Federal Government urges people to get vaccinated.
The government has said when the target is reached of 70% of the population above 16 fully vaccinated - restrictions will be relaxed.
Australian treasurer Josh Frydenberg said on Wednesday that the government has no plans to extend emergency economic support to states when they hit that goal.
Currently, just under a third of Australians are fully vaccinated.