Melbourne's new case average has dropped further to 1.4 as the state's coronavirus clean slate extends to six days.
There were no deaths or new cases again on Thursday and the city's mystery cases to Monday remain at two.
and Premier Daniel Andrews said the decision was a ringing endorsement of the state's ability to manage and suppress COVID-19 outbreaks.
Mr Andrews suggested the decision would put to bed some rather "unhelpful" and "inaccurate" commentary on Victoria's handling of the pandemic, including its oft-critiqued contact tracing regime.
"The premier of NSW would not be opening her border if she did not have confidence in a couple of important things," he told reporters on Wednesday.
"One, the public health response in our state, but most importantly in the people of Victoria to stay the course, to see this thing off, to get the numbers low, as we have."
NSW on Thursday had no new locally acquired cases of COVID-19 and just two new cases involving returned travellers in hotel quarantine.
NSW Health said the state did not record a single new local case in the 18,466 people who were tested for the virus in the 24 hours to 8pm on Wednesday.
Even though NSW has had low numbers of locally transmitted COVID-19 cases in recent days, the upcoming holiday period would see an increase in social and community gatherings, the department said in a statement.
"It is very likely that COVID-19 will continue to circulate in the community, including among people with mild symptoms or no symptoms," it added.
The Victoria-NSW border was closed on 8 July as the second wave ratcheted up in the southern state.
It was the first shutdown between the states since the 1919 Spanish flu epidemic, although border communities were allowed to cross through a permit system.
Victoria's other border with SA is also set to be relaxed in a fortnight, while Queensland is unmoved on its timeline to reassess its ban at the end of the month.
Even as NSW prepares to reopen, Mr Andrews encouraged residents to holiday at home.
"I would urge Victorians - don't be going to Sydney for Christmas unless you absolutely have to," the premier said.
"You want a summer holiday? We've got lots of opportunities here."
Victoria has not had six consecutive days without coronavirus deaths or new cases since February.
The state had just 30 active infections on Wednesday, the lowest number since the government began counting them in March.
The state's virus death toll remains at 819 and the national figure at 907.
Meanwhile, Carols by Candlelight announced it would go ahead without a crowd for the first time in the Melbourne Christmas event's 83-year history.
People in Australia must stay at least 1.5 metres away from others. Check your jurisdiction'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.
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