Sydney's Delta outbreak has not peaked and residents must brace for more deaths, authorities said on Wednesday, as Australia's largest city continued to break records for new daily infections despite a nearly two-month lockdown.

"We haven't seen the worst of it and the way that we stop this is by everybody staying at home," New South Wales (NSW) Premier Gladys Berejiklian told reporters in Sydney, the state capital.

NSW reported its biggest daily rise of 633 new cases, including 545 in Sydney, eclipsing the state's previous daily high of 478 hit on Monday. Sixty people have died since the first Delta case was reported in Sydney on June 16, including three confirmed on Wednesday.

With only about 28% of people in NSW above 16 years of age fully vaccinated, state Chief Health Officer Kerry Chant warned there would be more deaths if cases continued to rise.

Australia is in the grip of a third wave of infections that has exposed weaknesses in the country's vaccine rollout and forced more than half of its 25 million people into lockdown.

Only one-fourth of the adult population is fully vaccinated so far, putting pressure on Prime Minister Scott Morrison whose government missed its initial vaccine targets.

Sydney, Melbourne and the capital Canberra are under stay-at-home orders, pushing the A$2 trillion ($1.5 trillion) economy the brink of its second recession in as many years.

Victoria state, home to Melbourne, reported 24 new locally acquired cases of COVID-19 on Wednesday, the same number as a day earlier, as authorities race to track infections with an unknown source.

With just over 40,000 cases and 970 deaths, Australia has largely staved off the high COVID numbers seen in many other developed countries.

But efforts to contain the outbreak to Sydney have failed with the virus spreading to several regional towns where vaccination rates are low.

To ramp up the rollout, five vaccination teams of defence personnel are due to arrive in regional towns this week.

More than 500,000 Pfizer (PFE.N) doses, half of the supply procured from Poland over the weekend, have been moved to the 12 worst-affected suburbs in Sydney to vaccinate people aged below 40 years. -- Reuters

Sydney warned worse to come as Delta cases surge