SYDNEY (REUTERS) - Australia's most populous state of New South Wales (NSW) on Saturday (Jan 2) made masks compulsory and imposed new mobility restrictions as its virus cluster expanded by seven while neighbouring Victoria recorded 10 new locally acquired Covid-19 cases.

NSW Premier Gladys Berejiklian announced reductions to gym classes and banned dancing and singing at night clubs while restricting numbers at weddings, funerals and places of worship.

However, the five-day cricket Test match between Australia and India, scheduled to begin next Thursday, will go ahead with attendance at 50 per cent capacity, she said.

"We consider health and safety first and foremost, but we also need to think about well-being and jobs and the economy," Ms Berejiklian told reporters in Sydney.

"And that's why by putting these measures and settings in place we are confident we can continue to increase and encourage economic activity, give confidence to business and jobs, but also, of course, keep the virus at bay."

NSW, which has close to 200 active Covid-19 cases, would levy a A$200 (S$204) fine for not wearing a mask, with the rule being enforced from next Monday.

Victoria, which now has 29 active cases, this week made masks mandatory across the state while limiting gatherings and shutting its border to NSW, prompting lengthy delays at border checkpoints on New Year's Day.

The authorities on Saturday said genomic sequencing showed the Victorian outbreak was directly linked to the NSW cluster, vindicating the decision to shut borders.

"As a result of the learnings that we have gone through, we've taken the view that the responses we have put in place are proportionate and fair. Victorians have a lot at stake here," Victorian health minister Martin Foley said.

Australia has reported more than 28,450 Covid-19 cases and 909 deaths since the pandemic began.