NSW Health CHO Dr Kerry Chant said there are now a total of 85 Omicron cases in the state and flagged the potential for "super spreading events" at nightclubs in Newcastle.

"We are expecting those case numbers to increase over coming days as genomic sequencing is performed to confirm that they're Omicron," Dr Chant said.

"We are of the belief that Omicron transmission is accounting for an our increased case numbers at present."

Dr Chant said she is "particularly concerned about Newcastle area because we've seen a number of venues linked to the Omicron variant".

NSW is contact tracing venues such as the Argyle House nightclub, where there is a cluster of around 150 cases, two of which are confirmed to be the Omicron variant.

"The reason we are contact tracing these venues is because we believe that they've been super spreading or the potential for super spreading to have occurred," Dr Chant said.

"And what we're trying to focus our contact tracing efforts at this time is to protect communities from high risk super spreading events by moving quickly to identify the close contacts."

The latest alert was issued on Monday night for anyone who was at Newcastle's Finnegan's Hotel between 6.30pm on Friday and 2.30am on Saturday.

Everyone who was there - as well as their household contacts - must get tested and self-isolate for seven days until a negative result is received by everyone in the house.

NSW recorded one COVID-related death in an unvaccinated women in her sixties from Albany, who died at Goulburn Valley Hospital in Victoria on Monday.

There are currently 168 COVID cases admitted to hospital in NSW, with 21 in intensive care, nine of whom require ventilation.

NSW recorded 86,562 tests on Monday and the double-dose vaccination rate of those 16 and older is 93.2 per cent, while 94.8 per cent of people have had their first jab.

Some 81.4 per cent of children aged 12-15 have had one dose of a COVID-19 vaccine, while 77.7 per cent are fully jabbed.

On Wednesday the lockout of unvaccinated people will end as a swathe of COVID restrictions are lifted.

Density limits will be scrapped at venues and masks will no longer be mandatory in shops but will be required on public transport and planes as well as for indoors front-of-house unvaccinated hospitality staff.

Check-ins will only be required in high-risk settings such as hospitals, pubs, clubs and gyms and singing and dancing will be permitted indoors and outdoors for everyone.