From midnight on Saturday, residents in Fairfield, Canterbury, Bankstown or Liverpool local government areas are not allowed to leave their council area until July 30.
The only exception for residents from those areas is for those in health and emergency services.
Only critical retail such as supermarkets and pharmacies will be allowed to remain open from Sunday. Other retailers will have to do click and collect or takeaway, Premier Gladys Berejiklian said.
Another rule in place from Sunday until July 30 is that construction, large or small, will shut.
All office workers and others working from home should not be pressured to come into work and employers can incur a $10,000 fine if they pressure employees to come in.
"I can't remember a time when our state has been challenged to such an extent," Ms Berejiklian said
"Not a single one of these decisions was taken lightly."
She said at least 29 of the fresh cases were infectious in the community and it's this number that is "stubborn".
"We're not managing to get that curve to come down," she said.
NSW recorded 97 new local virus cases in the 24 hours to 8pm on Thursday, with at least 46 out in the community for part or all of their infectious period.
Health chief Dr Kerry Chant also confirmed a Sydney man in his 80s as the state's latest victim to succumb to the virus.
The outbreak has passed 1000 cases since it began on June 16.
