A two-month-old boy and a seven-year-old girl have become the first children under 10 to contract COVID-19 in NSW.
The children both had contact with people with coronavirus, NSW chief health officer Dr Kerry Chant said on Wednesday.
They are among the 1029 confirmed coronavirus cases in the state. Of those, some 500 people contracted the disease while overseas.
Premier Gladys Berejiklian says the public needs to "step up" to slow the spread of the virus which has so far killed eight people in Australia, including seven in NSW.
She backed new public restrictions announced by the prime minister on Tuesday night to control the spread of COVID-19.
"This is a time that all of us have to step up," Ms Berejiklian told reporters in Sydney.
"We need to make sure the community does the right thing by yourself, your family and others."
The premier says there will be thresholds in place allowing NSW to take further action, separate to other states, once the number of community transmissions reaches a set amount.
It comes as NSW police officers from Thursday will have the power to hand out on-the-spot fines of $1000 to individuals and $5000 to businesses that breach public health orders or ministerial directions, Commissioner Mick Fuller announced on Wednesday.
People in the firing line include returned travellers who contravene the requirement to self-quarantine for 14 days and those diagnosed with COVID-19 who similarly don't follow the rules.
Fines will also apply for breaches of the prohibition on outdoor gatherings of 500 people and indoor gatherings of 100 people.
It follows the passing of legislation in the NSW Parliament on Tuesday to help tackle the spread.
Under the bill, police will be able to arrest people reasonably suspected of breaching COVID-19 public health orders and return them home or to a place of detention.
Planning Minister Rob Stokes on Wednesday said usual planning controls restricting trading hours had been scrapped to allow for round-the-clock trading for supermarkets and pharmacies to make it easier for consumers to buy food and medical supplies.
State Opposition Leader Jodi McKay said NSW must be placed in full lockdown.
"People must go home and stay home," the Labor leader said in a statement.
"We are losing control of COVID-19 and if we don't lock down NSW the current spike will turn into a full-blown explosion."
A woman in her 70s on Tuesday became the seventh person in NSW to die from the virus.
She was one of 133 passengers on the Ruby Princess cruise ship which docked in Sydney last week to test positive after disembarking.
Australian Border Force chief Michael Outram on Wednesday insisted his organisation was responsible only for checking for contraband and ensuring orderly migration.
"The decision to allow them off in relation to the health and biosecurity issue was one of NSW Health," Mr Outram said.
Ten people with COVID-19 in NSW are in intensive care in hospitals.
Local council elections in NSW scheduled for September have been postponed for 12 months in the face of the COVID-19 crisis, Local Government Minister Shelley Hancock said in a statement on Wednesday.
Australian Associated Press