The Covid-19 lockdown in Sydney has been extended for a week as Australia's biggest city grapples with the highly infectious Delta variant.

Sydney, home to a fifth of Australia's 25 million people, was put into lockdown on 26 June as a Delta variant outbreak persuaded officials to tighten restrictions.

Strict stay-at-home orders were due to end on Friday, but now remain in place until 16 July.

"This Delta strain is a game-changer, it is extremely transmissible and more contagious than any other form of the virus that we've seen," New South Wales state Premier Gladys Berejiklian told reporters in Sydney.

With Sydney fighting its worst outbreak of the year so far, total infections have topped 350 since the first case was detected three weeks ago in a limousine driver who transported overseas airline crew.

A total of 27 new locally acquired cases of Covid-19 were reported today in NSW, up from 18 a day earlier.

Of the new cases, 20 were either in isolation throughout or for part of their infectious period, while seven cases spent time in the community while they were infectious.

Lockdowns, swift contact tracing and a high community compliance with social distancing rules have helped Australia suppress past outbreaks and keep its Covid-19 numbers relatively low, with just over 30,800 cases and 910 deaths.

The current lockdown is Sydney's second since the pandemic began.

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Health officials warned Sydney residents they expect cases to rise in the next 24 hours and urged residents in three western suburbs - Fairfield, Canterbury-Bankstown and Liverpool - to stay home.

Liverpool Deputy Mayor Mazhar Hadid said there was "no choice" but to lock down the neighbourhood.

"I know it's affecting small businesses in Liverpool, it's like they've lost their city, but we need to do the right thing," he told Reuters.

Schools in Sydney will move to remote learning next week when they return from the winter break.

Australia's vaccination drive has fallen well behind initial schedules after age restrictions were placed on AstraZeneca's Covid-19 vaccine, the backbone of the country's programme, due to the small risk of blood clots.

The government has since scrambled to secure additional supplies of Pfizer's vaccine, although large quantities are not due to arrive until late in the year.

Treasurer Josh Frydenberg told reporters that "challenges have been forced upon us" in the inoculation programme but the pace was picking up.