image copyrightGetty Imagesimage captionThe New South Wales state government said the case jump in lockdown made it necessary.
Sydney will face harsher Covid restrictions after a surge in cases showed current measures had not worked to stop the spread of the virus.
Australia's largest city reported 44 new cases on Friday, and said a high number of people in the community had been exposed.
Residents are banned from travelling more than 10km from their homes.
Outdoor exercise is limited to groups of two, and only one person from each household can go grocery shopping.
Funeral gatherings have also been limited to just 10 people.
The New South Wales state government on Friday acknowledged the rules were "shocking" but said the increased number of cases after the city was put in lockdown on 26 June had made it necessary.
"New South Wales is facing the biggest challenge… since the pandemic started and I don't say it lightly," Premier Gladys Berejiklian said on Friday.
The highly infectious Delta variant, first detected in India, has spread rapidly in the state capital in recent weeks causing Australia's biggest outbreak in a year. There have now been 400 cases recorded in the community.
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Most Australians – around 90% of the population – remain unvaccinated.
Sydneysiders were hoping to exit the lockdown on 17 July. But experts say the state government may need to extend the lockdown.
"Until we get to zero or close to zero, we cannot ease restrictions," Ms Berejiklian said on Friday.
"And unless there is a dramatic turnaround in the numbers, I can't see how we would be in a position to ease restrictions by next Friday," she added.
Ms Berejiklian also rejected suggestions that the state government might give up on virus elimination efforts. She noted that Australians were watching nations like the UK and the US open up, but that those nations could only do so because of their high vaccination rates.
image copyrightEPAimage caption100 more police officers were deployed to southwestern suburbs of Sydney
"We cannot live with this virus when our rate of vaccination is only at 9%. Because if we chose to live with this while the rates of vaccinations are at 9%, we will see thousands and thousands of hospitalisations and deaths," said Ms Berejiklian.
Australia's vaccine rollout began in February when the nation had very few cases. Its progress has been held up by supply problems and hesitancy over the side effects of the AstraZeneca jab.
media captionIn June, Sydney residents talked about the city going into lockdown
Ms Berejiklian urged locals to comply with the strict rules and to only leave their homes for essentials such as shopping, exercise and care-giving.
Authorities have reported a number of people in lockdown having parties and visiting other households.
But critics of the restrictions point to the fact that businesses such as restaurants offering takeaway and retail shops have been allowed to stay open.
"The best advice on what it will take to get us to zero community transmission is up to all of us," Ms Berejiklian said on Friday.
On Friday, 100 more police officers were deployed to southwestern suburbs of Sydney – the new hotspot of the cluster – to patrol the streets and ensure compliance with the rules.