Central Sydney's streets were deserted on Saturday as Australia's largest city began a week-long lockdown to contain the highly contagious Delta coronavirus variant, with authorities warning broader restrictions could follow.

More than 80 Covid-19 cases have been reported so far in an infection surge linked to an international flight crew transported to a quarantine hotel from the airport.

The flare-up was a shock for a city that had returned to relative normality after months with very few local cases.

The sudden curbs took effect at midnight, affecting an estimated one million people across Sydney's business district and affluent eastern suburbs.

But the spread of the outbreak beyond the four neighbourhoods already under lockdown was spurring "growing and more intense concern", New South Wales state health minister Brad Hazzard said. 

"The Delta variant is proving to be a very formidable foe," he told reporters.

"No matter what defensive steps were taking at the moment, the virus seems to understand how to counter-attack." 

Health officials have been alarmed by the rapid spread of the Delta variant first seen in India, noting instances of people passing on the virus during fleeting encounters in shops and then quickly infecting close family contacts.

They have flagged a string of new possible virus exposure sites, including a popular city bar, in addition to the scores of businesses and public places already identified as risks. 

State Premier Gladys Berejiklian said a crisis meeting with public health officials would be held later Saturday to decide whether expanding the lockdown to other areas of Sydney was needed. 

"I am putting everybody on notice that we may need to extend that during the course of the day or tomorrow," Berejiklian said.

Sydney residents subject to the current restrictions have been ordered to stay home for at least a week, only venturing out to purchase essential goods, obtain medical care, exercise, go to school or if they are unable to work from home.

An earlier ban on people leaving the city was also extended on Friday, as traces of the virus were detected in sewage in the far-flung outback town of Bourke, about nine hours drive northwest of Sydney.

It is the latest in a string of snap "circuit-breaker" lockdowns across major cities around Australia, with most cases linked to returning travellers held in hotel quarantine.

Australia has been among the world's most successful countries in containing Covid-19, with just over 30,000 cases and 910 deaths in a population of about 25 million.