The government is concerned that NSW could be at risk of returning to where it was when the Crossroads Hotel outbreak began in early July, as the state recorded 11 new local COVID-19 cases overnight.
Premier Gladys Berejiklian said this latest surge in numbers had caused the government to stop short of lifting any more restrictions, but that relaxed rules announced yesterday for outdoor venues and music performances would stay in place.
Overall, the state recorded 13 new cases of COVID-19 overnight, with two in hotel quarantine.
Nine of the local cases were linked to the Lakemba GP cluster and the other two were linked to the existing private clinic cluster.
One further case, which has not been included in today's numbers, was found in a man in his 70s from Bargo, just west of the Illawarra.
Ms Berejiklian said the government was "the most concerned we've been" since start of the previous Casula cluster, which was started by a man who travelled from Melbourne and quickly spread through South Western Sydney.
"Our state is on the verge of being where it was when we had the first seeding incident from Victoria," she said.
"Yesterday we announced an easing of restrictions... and we still think that is a prudent decision
"But today the government was intending to announce further restrictions would be eased.. but we have chosen to put those on hold because of where we are up to."
The lifting of new restrictions was to do with group booking numbers at hospitality venues, and patron numbers for smaller venues, she said.
She said the government was trying to strike a balance between supporting businesses and managing the health risks, noting new jobs figures would be coming out on Thursday.
"We want people to have confidence in NSW that the government is really preoccupied with creating job security," she said.
"I want all of us to be very positive about the summer."
She said the government would wait for the green light from NSW Chief Health Officer Dr Kerry Chant, but said there was still a chance new restrictions would be lifted later this week.
Dr Chant said it was reassuring that all of today's cases were linked to exisiting clusters, but that there were "potentially infectious people in many settings" due to the large number of venues which have been identified.
Health Minister Brad Hazzard said he had "some very serious concerns about testing".
"The [case] numbers we got overnight are reminiscent to me of Crossorads," he said.
"It worries me that perhaps the community are not actually coming out in the numbers we need to be tested.
He noted that just over 7000 people had been tested in Sunday, and said he was making "a very strong call to our front-line troops" to go and get tested.
Overnight there were 16,000 tests, but he said he was looking at having 20,000 tests or more each day as case numbers rise.