Premier Gladys Berejiklian said there were 110 new locally acquired cases of COVID-10 in the 24 hours to 8pm on Tuesday, with 43 in the community while infectious.
Another 17 cases were in isolation for part of their infectious period.
Ms Berejiklian said nearly 84,000 people were tested on Tuesday - the highest number of tests to date.
"This is a great result, and one we need to keep up in the next few weeks," she said.
"It means we are scooping up all the cases we can find.
"Had we not gone into the lock a couple of weeks ago, that number would undoubtedly been thousands and thousands.
"We have done well.
"Our vaccination rates are so low and yet we have done so well in stemming the virus.
"Now we need to quash it."
The higher number of tests had helped to identity the "high number" of cases in the 24 hours to 8pm on Tuesday.
Ms Berejiklian said the government had made some "difficult decisions" based on the health advice.
"It's really important for us not to talk about what might happen," she said.
"Once the number of cases and how they are transmitting comes through, we will have a better idea of what things after July 31 will look like.
"We do need to give the extra restrictions a chance to do what they need to do.
"We won't live as freely as we would like until those vaccination rates increase."
NSW Health's Dr Jeremy McAnulty said there were 106 COVID-19 patients in hospital, 23 in intensive care, and 11 requiring ventilation.
"We are now seeing cases in Western Sydney increased," he said.
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