Only three new cases of coronavirus have been recorded in NSW in the 24 hours to 8pm on Monday, the lowest number in more than a month.
Two of the new cases, from southwest Sydney, were locally acquired, while the other is a returned traveller in hotel quarantine, Deputy Chief Health Officer Dr Jeremy McAnulty said on Tuesday.
One of the cases is among a growing number that have no known source, which is worrying health authorities.
There have been 16 cases in the past four weeks where the source has not been identified or linked to clusters, indicating COVID-19 is continuing to circulate in the community undetected.
Premier Gladys Berejiklian on Monday said she remains more anxious than ever about the spread of infections where the source is a mystery.
"That is a big concern because ... Melbourne didn't get worse because of the number of cases they had," she said on Monday.
"They had undetected community transmission which then unknowingly got to a stage where it ... formed a number of different clusters and we certainly don't want that to happen here."
On Monday afternoon, the City of Sydney council area was declared a coronavirus hotspot by NSW Health, amid concerns over undetected community transmission in the region's east.
The local government area houses around 240,000 residents and includes the City's CBD and Circular Quay.
New South Wales residents who visited the area in the past two weeks are urged to get tested if they have mild coronavirus symptoms, including a runny nose or scratchy throat.
Campbelltown, Canterbury Bankstown, Cumberland, Fairfield, Liverpool and Parramatta are also declared virus hotspots by the New South Wales Government.
Health authorities warned scores of Sydney market-goers are at risk of contracting COVID-19 after a person worked at one of the city's most popular shopping spots while infectious.
The positive case attended the Sydney Markets at Flemington on 9 August, but was diagnosed a week later.
Close contacts have been identified and advised to isolate themselves for two weeks and get tested.
Anyone else who attended the market between 8am and 4pm are considered casual contacts and must monitor for symptoms.
The market has been thoroughly cleaned and NSW Health says there is no ongoing risk to the public.
The positive case is among the growing number that have unknown sources, which are worrying authorities.
On Wednesday, tough new rules to stop the spread of the virus in NSW schools will come into force.
Formals, dances, graduation ceremonies, choirs and all social events have been banned and students must remain within their relevant class or year groups.
Chief Health Officer Kerry Chant said the rules applying to public schools would come into effect on Wednesday, but that she has written to private schools asking them to also abide.
"It is also being done with the spirit of trying to make sure that our schools can maintain their on-site learning," she said.
Under the new guidelines, anyone with COVID-19 symptoms cannot return to school until they receive a negative test result, spectators at school events are banned, and sports carnivals are restricted.
People in Australia must stay at least 1.5 metres away from others. Check your state’s restrictions on gathering limits.
If you are experiencing cold or flu symptoms, stay home and arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080.
