New South Wales state reported 112 new locally transmitted Covid-19 cases, almost all of them in Sydney, marking the fifth consecutive day of record case numbers.
There was, however, a glimmer of light as the number of newly-infected people who were out in the community while infectious dropped to 34, down from 45 on Sunday.
State Premier Gladys Berejiklian said the progress of that figure in coming days would determine whether Sydney's lockdown, due to end on Friday, would be extended.
"That's the number we need to get as close to zero as possible," Berejiklian said during her daily televised briefing.
"It is really up to us. The health expert advice will be based on what those numbers look like. I can't be clearer than that."
Berejiklian said a majority of Monday's cases were family members or close friends of already infected persons.
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Lockdown measures in Sydney, home to a fifth of Australia's 25 million population, were toughened over the weekend, restricting residents to within 10 kms (6 miles) of home for exercise. Outdoor gatherings have been limited to two people and only one person in a household can leave the home each day for buying essentials.
Australia has previously successfully suppressed sporadic flare-ups of infections through snap lockdowns, speedy contact tracing and tough social distancing rules. With a total of around 31,200 cases and 911 deaths since the pandemic began, it has fared better than many other developed economies.
However, the highly transmissible Delta strain and a sluggish vaccine rollout have stoked concerns of a significant outbreak. Only around 11 per cent of Australia's adult population of just over 20.5 million have been fully vaccinated so far.