Hong Kong on Tuesday imposed its strictest social distancing measures yet as it struggles to maintain a "zero-Covid" policy amid an Omicron-fuelled spike in cases. 

Like mainland China, Hong Kong has adhered to a staunch "zero-Covid" policy that has kept infections low through targeted lockdowns and prolonged social distancing measures. The approach has left it one of the most isolated major cities in the world. 

But the spread of the Omicron variant in the Chinese territory is threatening to derail the strategy as cases rapidly tick up each day. 

On Tuesday, city leader Carrie Lam announced gatherings in private premises will now be limited to two families -- the first time Hong Kong has applied restrictions to homes. She did not detail how it would be enforced.

In public, all gatherings will now be capped at two people -- down from four.

"We are now facing the most dire situation," Lam said. 

"We have seen a surge in the number of confirmed cases and some are worried the real number would be beyond thousands each day."

The city on Wednesday recorded 625 new cases -- setting a new daily record. 

Starting Thursday, Hong Kong will close hair salons and places of worship, while a vaccine pass will be rolled out February 24. 

The pass will bar the unvaccinated from shopping malls, supermarkets, wet markets and department stores.

Since the start of its Omicron outbreak in late December, Hong Kong had already closed gyms and bars, while restaurants are only allowed to serve takeout in the evenings.

The latest measures aim to buy time for Hong Kong to increase its vaccination rate, Lam said -- which sits at less than 50 percent for the elderly. 

"The time has come for Hong Kong to take some tough measures," she said. 

Long lines formed outside local testing centres across the city Tuesday.

"It's getting worrying," said Maggie Wu, a barrister who had waited more than two hours to get tested near City Hall.

"I don’t think the economy will allow for a full lockdown," she said, adding that Hong Kong needs to "reconnect to the world". 

Health officials said they have detected 19 infection clusters and urged the public to limit socialising.