NSW teachers and senior students in Greater Sydney and surrounds will have to wear masks when they return to school next term.
Education Minister Sarah Mitchell said the new COVID-safe rules apply to schools inside areas impacted by the stay-at-home orders - Greater Sydney, the Blue Mountains, Central Coast, Wollongong and Shellharbour.
Masks will be mandatory for all staff in all school settings, as well as students from Year 7 upwards when on-site learning resumes on July 19, she said on Thursday.
Ms Mitchell says she understands it's a challenging time for students, staff and parents but schools are prepared to manage the restrictions.
In regional areas, masks will be recommended for all staff in all school settings as well as high school students.
On Wednesday, Premier Gladys Berejiklian announced that when term three resumes next week, pupils in the lockdown areas would be learning from home while regional schools would have strict COVID restrictions.
Meanwhile, harsher localised restrictions could be introduced for communities in Sydney's southwest if COVID-19 continues to spread rapidly in the area, she warned.
Lockdown orders governing five million people in Sydney and its surrounds have been extended for a third week - until at least July 16 - after being initially due to end on Friday.
Business NSW estimates the lockdown is costing the state $1 billion a week.
But with the number of new cases who have spent time in the community while infectious remaining high, it may not be enough to stop the spread in some suburbs as the epicentre of the outbreak moves from Sydney's east to the southwest.
Ms Berejiklian warned case numbers would spike in the coming days due to the highly infectious Delta strain of the virus spreading rapidly in the local government areas of Fairfield, Liverpool and Canterbury-Bankstown.
If the situation further deteriorates in those communities, harsher localised restrictions could be imposed, she warned.
The premier invoked her Armenian background when appealing to people in multicultural communities to stay home.
"Can I please say to the communities in those areas - many of them have a similar background to me - please don't mingle with family," she said.
"It's hard. But can I just say to everybody please don't mingle with family, don't think it's OK to go visit your cousins, don't think it's OK to have sleepovers."
Fairfield Mayor Frank Carbone said on Thursday he was concerned southwest Sydney was being unfairly targetted, saying "this isn't a Fairfield problem, I won't take anyone pointing finger at Fairfield".
"We have very large families out here. It doesn't take away the responsibility (or) take away the need for (all of) us to be vigilant," he told Nine Network.
"Ultimately we all need to do our best to make sure we contain the virus. It doesn't matter where you live, the eastern suburbs or western suburbs we are all in this together."
NSW recorded 27 new local cases in the 24 hours to 8pm on Tuesday. Just 13 of the new cases were in isolation for the entirety of their infectious period.
There have been 357 local cases reported since 16 June when the first case was detected in an unvaccinated Sydney airport limousine driver.
NSW Health issued nearly 20 alerts for venues of concern late on Wednesday night including supermarkets at Casula, Bonnyrigg, Maroubra, Revesby, petrol stations at Condell Park and Pagewood as well as a pizzeria at Waverley.