The number of new COVID cases triggered by Newcastle's nightclub clusters jumped from 26 in the Lower Hunter on Monday to 216 on Tuesday.

But health officials are expecting higher numbers again on Wednesday.

The Newcastle Herald understands that by Wednesday, more than 200 cases will have been linked to the Argyle House super-spreader event. Thousands of people in Newcastle and the Hunter are now in isolation as the number of close and secondary contacts associated with a string of new exposure sites continues to grow. Hunter businesses were closing their doors on Tuesday morning after learning staff or customers had tested positive after attending a venue of concern over the weekend.

Schools including Newcastle High were offering "minimal supervision" on Tuesday due to "'unforeseen and significant staff absences''; while health staffing levels at both public and private Hunter hospitals were also heavily impacted by the growing list of exposure sites. Hunter New England Health's Dr David Durrheim said more than 150 positive COVID cases had already emerged from an event at Newcastle's Argyle House last Wednesday. He said the super-spreader event will have been one of the highest transmission events in a single venue this year "probably anywhere in the world".

"The attack rate is already a quarter of the people who were there," he said.

"There were about 650 people in attendance. And we already have 150 cases.

"That's pretty profound. Obviously these are some of the earlier cases, and further cases may still result."

More than 1000 people who attended Finnegan's Hotel on Friday night and early Saturday have since been identified as close contacts after six COVID-positive cases attended the venue between 6.30pm and 2.30am Saturday.

"I think we should expect to see a higher number again," Dr Durrheim said.

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Due to the high transmissibility of the Omicron variant, NSW Health is asking all of the household contacts of people who attended Argyle House on December 8, a medical ball at NEX and Finnegan's Hotel on Friday, December 10, to be tested and self-isolate until a negative result is received by everyone in the house.

"Unfortunately Finnegan's Hotel also had a great number of people in attendance during the time a number of cases were present," Dr Durrheim said. "Given the nature of hotels, and pubs, and nightclubs - which are noisy, people raise their voices, people sing, people crowd together - I wouldn't be surprised if we see a large number of cases coming from that exposure too.

"In these environments it is spreading like wildfire.

"We have heard what the politicians have said about living with the virus, but the virus is living with us at the moment."

Dr Durrheim said the science was "still out" on the Omicron variant, and they strongly suspect that is the strain dominating the Hunter numbers. While we have high vaccine coverage, people who had been exposed to the virus during this outbreak so far were mostly younger people who had been double-vaccinated.

"So it is quite hard for us to really extrapolate from their experience what we might see in those who are not vaccinated or in people who are older," he said.

The outbreak comes as mask mandates and other public health measures were due to be scaled back on Wednesday. Lower Hunter residents reported queuing up to two hours in traffic for COVID tests on Tuesday.

Testing rates in the Newcastle LGA have tripled since December 5.

Hunter Highway Patrol Inspector Mick Buko said police needed to manage high levels of traffic around some of the region's testing sites - with problem areas at Speers Point, Adamstown and Wickham.

Across Hunter New England, there were a total of 224 new COVID cases announced on Tuesday, including 116 in the Newcastle LGA, 48 from Lake Macquarie, 28 from Maitland, 11 from Port Stephens, and 7 from Cessnock. There were five from Singleton, and one in Dungog. There are five people in hospital, and three in intensive care. There has been one death in NSW - a woman in her 60s from the Albury area. NSW Health said she was not vaccinated.

Dr Durrheim said any decisions about whether the Hunter would be deemed a hotspot would be determined at a state level, but this outbreak was already having an impact on people's holiday and Christmas plans.

He recommended people delay any events that were not essential until after Christmas.

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