NSW recorded eight new locally-acquired cases of COVID-19 in the 24 hours to 8pm on Tuesday, with seven connected to the so-called Avalon cluster, which now totals 97 infections.
The eighth case is a contact of an infected quarantine nurse. A further eight cases involved returned overseas travellers in hotel quarantine.
The tally of eight local COVID-19 cases came from almost 42,000 tests.
Premier Gladys Berejiklian announced a four-tier system for Christmas gatherings across NSW would be implemented from Thursday until December 27, when the current restrictions will be reimposed.
Restrictions for regional NSW will remain unchanged, while up to 10 people and unlimited children aged under 12 will be permitted to gather on Christmas Eve, Christmas Day and Boxing Day across greater Sydney.
The northern beaches, meanwhile, will be split into two for Christmas restrictions.
Residents north of the Narrabeen Bridge, where most COVID-19 cases have been acquired, will be allowed to host up to five people in their homes - however they must only be people from the local area.
On the southern end of the peninsula, in suburbs such as Manly, up to 10 people will be permitted to gather, but locals may not leave the area. They are only permitted to welcome other locals.
"The less mobility there is, the less risk of the virus being transmitted throughout the community further," Ms Berejiklian told reporters.
"Whilst we appreciate the modest changes we've made over the next three days, we also accept and respect the fact that many families and individuals may choose not to take up that opportunity."
NSW Health has also issued fresh health alerts for venues around Sydney and the regional towns of Orange and Gundagai after they were visited by people with COVID-19.
The venues affected include the Paddington Alimentari restaurant in the eastern suburbs and Charlie & Franks cafe at St Leonards on the north shore.
Other venues visited by a person with COVID-19 include shops on the northern beaches at Mona Vale, Newport and Avalon and a swim school and playground at Warriewood.
The entire northern beaches local government area is currently in lockdown under a public health order that's due to expire at 11.59pm on Wednesday.
Thousands of people around the state are self-isolating and will continue to do so over the festive period.
All state and territory borders are currently closed to people travelling from Greater Sydney.