SYDNEY - Sydney remains on tenterhooks as a fresh Covid-19 cluster threatens to bring the city to a standstill during the Christmas holiday and prompts divisions on whether to adopt a tougher response.

The new cluster in Sydney's Northern Beaches region has grown to 90 cases, including eight recorded on Tuesday (Dec 22), down from 30 new cases on Sunday and 15 on Monday.

The New South Wales (NSW) government will on Wednesday reveal whether its new restrictions to deal with the outbreak will be extended into the Christmas holiday period, which starts on Thursday.

The restrictions, which began earlier this week, included an effective lockdown for the Northern Beaches as well as gathering limits of 10 people per household throughout Sydney and other parts of the state.

State Premier Gladys Berejiklian said she was concerned about the spread of the virus beyond the Northern Beaches, particularly as infected people were known to have visited venues across the state.

But she was also concerned about taking measures that restrict families from uniting over the Christmas holiday. "If it wasn't this time of the year, the decision would be much easier," she told reporters.

The outbreak came as a shock to Australia's largest city, which had largely been operating as normal after experiencing more than five weeks with almost no new local cases.

Until recent days, cafes and restaurants had been packed, and shopping centres filled during the annual pre-Christmas rush, which is one of the busiest periods of the year.

But the mood in the city soured after the authorities imposed the fresh restrictions and other states closed their borders to visitors from NSW.

Sydney's residents have been flocking to Covid-19 testing centres, leading to record numbers of daily tests. The authorities processed 44,466 tests on Monday alone - a record for the state.

But the outbreak has led to concerns that the state has been too complacent about the risks of a second wave and has led to divisions over the government's response.

Public health experts have been calling for stricter measures, including mandatory masks and a brief citywide lockdown.

The state government currently recommends - but does not require - mask-wearing for venues such as shops and restaurants.

Associate Professor Sanjaya Senanayake, an infectious disease expert from the Australian National University, said masks were safe, cheap and effective, and should be compulsory.

"We know from earlier in the year when masks were recommended, not mandated, a third of people wore masks," he told Channel Nine. "If you mandate, it is far likely to get a higher level of compliance."

Many experts have urged the state to follow the lead of Victoria, which faced a second wave earlier this year and swiftly imposed mandatory masks and one of the world's toughest lockdowns, which included curfews.

The president of the Australian Medical Association, Dr Omar Khorshid, called for mandatory masks and a "short and sharp" lockdown to suppress Sydney's outbreak.

But NSW Health Minister Brad Hazzard rejected the call for mandatory masks, saying such a measure would be difficult to enforce, particularly on public transport.

"If we make it compulsory, the big issue is the bus drivers become the policemen," he added.

The state government has insisted its current health measures are adequate, particularly its widespread availability of testing and its contact tracing system, which it claims is one of the best in the world.

Ms Berejiklian urged people to comply with contact tracing rules, including a requirement that they register their details at restaurants, gyms and other venues.

"We do have one of the best, if not the best, contact tracing teams on the planet," she said.

NSW has locally-based tracers who are often familiar with the areas where they work. The state government issues regular public notices about Covid-19 hot spots, urging people who have been in certain venues at specific times to self-isolate or to monitor symptoms.

In September, during Victoria's second wave, the local authorities sent a team to learn from NSW's contact tracing, particularly the use of local tracers and the ability to quickly analyse data from the local teams.