Police are working with NSW Health to make sure the Liverpool building's residents, who have all been deemed close contacts, isolate for 14 days.

Investigations are also underway at the units at Campbell Street to find out the number of affected households.

The lockdown on Friday came after NSW reported a record 291 new locally-acquired cases, with at least 96 of those in the community while infectious.

A woman in her 60s who acquired the virus while a patient at Liverpool Hospital became the latest fatality.

The unvaccinated woman was infected by a health care worker at Liverpool Hospital last week while she was being treated for a kidney problem.

Her death, the second connected with the outbreak at the hospital, takes the current outbreak toll to 23.

The virus has also spread to another school, with the Fowler Road School in Merrylands in Sydney's West closed for cleaning after a staff member tested positive to COVID-19.

Staff and students at the special education school have been identified as close contacts and asked to self-isolate.

NSW Premier Gladys Berejiklian on Friday warned the escalation in daily infections would continue in the coming days.

The NSW premier all but conceded the state would not reach her earlier target of zero cases circulating in the community.

Ms Berejiklian said the case numbers and behaviour of the Delta variant meant it was "pretty obvious" that "we now have to live with Delta one way or another".

But she insisted that returning to zero "has to be our aspiration".

The premier again pointed to vaccination as a way out of the crisis.

The more people who are vaccinated, the sooner the state will be able to live more freely, Ms Berejiklian told reporters.

She said life on August 29 - when Greater Sydney's lockdown is scheduled to lift - would be a reflection of how many people had been vaccinated and the case numbers.

"Once we have the 70 per cent vaccination rates, life will be much easier and of course once we hit 80 per cent, life will be as normal as we can expect during COVID," she said.

Some 44.66 per cent of NSW residents over 16 have been jabbed at least once, with a record 93,626 doses issued in the state on August 5.

While case numbers in Fairfield are flattening, Canterbury-Bankstown is emerging as the area of most concern. That area will endure a greater police presence to ensure lockdown compliance.

Twelve staff members at a KFC in Punchbowl have tested positive for the virus. It has been listed as a close contact venue for the seven-day period to Monday.

Meanwhile, all trial exams for Year 12 students in Sydney will be moved online. Students in the eight local government areas seeing a higher caseload will be barred from the classroom until further notice.

The council areas are Blacktown, Campbelltown, Canterbury-Bankstown, Cumberland, Fairfield, Georges River, Liverpool and Parramatta.

Year 12 students elsewhere will be able to re-enter the classroom for specific activities on August 16.

The government hopes to vaccinate about 24,000 final year students at the Qudos Bank Arena at Olympic Park from next week.

The outbreak caused the NSW government to call off Vivid Sydney 2021 on Friday, but the festival of lights should be back in May next year.

There are 50 patients in NSW in intensive care, with 22 ventilated.

Only six ICU patients have had any dose of the vaccine, and none are fully vaccinated.

Two of the new cases were identified in the Newcastle area, which along with the Hunter was sent into a seven-day snap lockdown on Thursday.

There were no new cases in the Central Coast, which reported eight cases the previous day.

Twelve shops at a shopping centre at Charlestown in the Greater Newcastle area have been declared close contact venues, with possible exposure occurring across a three-hour period last Thursday afternoon.

The government also declared on Friday that anyone who arrives in NSW and has been in Victoria since Thursday evening must follow that state's stay-at-home rules and only leave home with a reasonable excuse.

Australian Associated Press