The entire state is currently locked down and police are cracking down on compliance as authorities battle to contain the spread of the virulent Delta strain.
The two people who died were a previously reported man in his 60s in western Sydney and a man in his 90s at Concord Hospital. Both had received one vaccine dose.
The fatalities take the state's death toll for the current outbreak which erupted in June to 81.
There are currently 767 infected people in hospital, with 117 in intensive care and 47 on ventilators, NSW Health said.
Premier Gladys Berejiklian on Friday also announced HSC exams for NSW year 12 students in 2021 would be pushed back to November 9, and all people working on school campuses must be vaccinated by November 8.
Priority vaccinations will be scheduled for school campus staff from September 6.
The government is also planning a staged return to school from October 25, when kindergarten and year one children return to the classroom.
Years two, six and 11 return from November 1, and the remaining year groups return from November 8.
Year 12 students studying for their HSC exams will have full-time access to school campuses for study purposes from October 25.
If stay-at-home orders are lifted in some areas before October 25, all students in those local government areas can return to school.
"We know that the best teaching and learning happens in the classroom, but we also know it's really important for the social and emotional wellbeing of our students to be with their friends and back with their teachers," Education Minister Sarah Mitchell told reporters.
"Any year 12 cohort in recent times, you've really been through it ... year 11 was disrupted last year and now you are learning from home in a really crucial period of your schooling."
The Pfizer jab has now been officially approved for use by Australian health authorities to vaccinate children aged 12 to 15.
"We assume that will be done in September, so that is also a pleasing development to give everybody that extra degree of comfort, and we are really looking forward to transitioning children back to face-to-face learning," Ms Berejiklian told reporters.
The NSW government has also announced a $200 million support package for Not-for-Profit (NFP) organisations operating amid the outbreak.
NSW recorded more than 1000 daily coronavirus infections for the first time on Thursday.
Ms Berejiklian nevertheless announced a long-promised change to restrictions earned after the state reached six million vaccinations.
From September 13, up to five fully vaccinated adults can gather outdoors, but only those outside of western Sydney's local government areas of concern.
Children - not yet vaccinated - can be included in these groups of five.
In the 12 council areas of concern, households with all adults vaccinated can gather outdoors for recreation, such as picnics - but not with other households.
More relief is also on the way for businesses, with announcements on further assistance looming.
Meanwhile, a COVID-19 positive man, 27, who was being sought by NSW Police for allegedly breaching public health orders multiple times has been arrested.
He's been charged with 13 offences related to the breaches, including two counts of failing to comply with self-isolation directions.