NSW Health issued an alert on Thursday evening about the "On Repeat: Taylor Swift Red Party" at Sydney's Metro Theatre, with at least 600 people who arrived after 9pm on Friday deemed close contacts.

NSW Health said it is likely some of the new cases are the Omicron variant.

The revellers must be tested and self-isolate for seven days, and their household contacts also need to be tested and isolate until they receive a negative result.

The state's rising transmission rates prompted NSW Health to announce late on Thursday new restrictions on visits to health facilities.

"We have temporarily restricted visitors to healthcare facilities due to increasing transmission rates with the emergence of the Omicron variant," the health authority tweeted.

"We have not made this decision lightly. We must always prioritise our vulnerable patients and staff who are arguably the most vital workers needed in a pandemic."

The Sydney dance party alert comes after two men received fines for allegedly skipping self-isolation to go clubbing in Newcastle before testing positive.

The two 20-year-olds attended the Argyle House nightclub on Wednesday evening, the same day both had been ordered to self-isolate as they were close contacts of COVID-19 cases.

More than 200 people acquired the virus at the party.

One man was fined $10,000 over the breach and a separate visit to another house. The other man will have to pay $5000.

Health authorities have ordered the cancellation of a Newcastle music festival as the regional city becomes the epicentre of the Omicron-fuelled outbreak in NSW.

The Lunar Electric music festival was due to take place in Newcastle on Saturday, boasting The Veronicas, Pendulum and Darude on its lineup.

But the government cancelled the event under a public health order on Thursday afternoon.

"NSW Health considered that the ongoing spread of COVID-19 in the Newcastle area ... presents too great a risk for the festival to take place this weekend," the agency said in a statement.

The Hunter is responsible for 633 of the record 1742 new cases in NSW in the 24 hours to 8pm on Wednesday.

The majority are the highly transmissible Omicron variant.

The cluster has been driven by super-spreading events at pubs and clubs.

Health authorities want the Newcastle community to seriously consider postponing social events until after Christmas to keep family gatherings safe.

An alert was issued on Wednesday night for another Newcastle pub.

Anyone who was at the Cambridge Hotel on Hunter Street between 6.30pm on Friday and 2.30am on Saturday must get tested and isolate for seven days.

The government on Thursday extended the vaccine mandate for health care workers, bringing it into line with Victoria, Queensland and Western Australia.

All health practitioners - including doctors, nurses, speech pathologists and naturopaths, and support staff - working in public and private settings must be double-dosed by January 31.

The mandate previously applied only in public and private hospitals.

The number of cases reported on Thursday is a jump of 382 from the previous day's tally. The state has now recorded 122 cases of the Omicron variant.

The previous highest daily tally in NSW was recorded on September 11 when there were 1599 local cases, or 1603 if infections contracted overseas are included.

The record number of new cases were diagnosed from 143,938 tests in the 24 hours until 8pm on Wednesday.

There were no deaths recorded, whereas during the previous height of the pandemic there were a record 15 fatalities on September 29 and October 1.

Authorities are hoping the high vaccination rates - 93.3 per cent of adults are fully jabbed - will keep the stress on the health system to a minimum.

There are 192 people in hospital (up from 166), 26 of them in ICU (up two).

Australian Associated Press