At least 70 of those people were circulating in the community for all or part of their infectious period.
Premier Gladys Berejiklian warned cases numbers would rise again.
"There's no doubt, again, that we anticipate case numbers will continue to go up before they start coming down and we need to brace ourselves for that," she said on Thursday.
The spike in cases was recorded in the 24 hours to 8pm on Wednesday and was up from 110 the previous day.
The previous high was 112 cases last week.
Of the 124 cases, 37 were in isolation throughout their infectious period, 22 were in isolation for part of their infectious period and 48 cases were infectious in the community.
The isolation status of 17 cases remains under investigation.
Greater Sydney and surrounding regions will have to wait until at least the weekend to see what impact harsher lockdown rules have had and to see if the lockdown will end on time.
The virus must be quashed before restrictions, now in a fourth week, can be lifted.
The lockdown is currently due to end on July 30.
Victoria
Victoria has recorded 26 new locally acquired cases of coronavirus a week into its statewide lockdown.
The health department has confirmed Thursday's new infections are all linked to the current outbreak, which originated in NSW and now totals 133 cases.
Twenty-four of the 26 cases were in quarantine throughout their entire infectious period.
It is the state's highest daily total of the current outbreak and follows the 22 cases reported on Wednesday.
But Victoria's Chief Health Officer Brett Sutton says he suspects the state would already be dealing with 200 to 300 cases if it had not entered lockdown a week ago, citing the highly infectious nature of the Delta variant.
"It is a variant that takes off from dozens to thousands of cases within just a matter of weeks," he said on Wednesday.
"If we'd locked down today, instead of when we did, we would get thousands of cases in the next couple of weeks. We'd be in a world of hurt."
Prof Sutton said he believed community transmission had peaked but expected more household cases to emerge.
He also warned the number of people in intensive care could grow, given the severity of the Delta variant.
As of Wednesday, there are five people in hospital with Covid-19, including a man from Barwon Heads in intensive care.
Some 18,000 primary close contacts are self-isolating across the state, while the number of exposure sites has grown to more than 380.
Queensland
Queensland will close its border to NSW for four weeks amid concerns about Covid-19 cases coming into the state.
No new Covid-19 cases were recorded in Queensland on Thursday.
The border has already been closed to Greater Sydney for weeks but the state will shut the border to the rest of NSW from 1am on Friday.
Deputy Premier Steven Miles says the border needs to the close to protect the community when social distancing restrictions in Queensland ease from 6am on Friday.
He says there's now too much risk of Covid-19 cases getting into Queensland through regional NSW from outbreaks Sydney, Victoria and South Australia.
"Our border is effectively closed to those people already, but in order to be able to ease these restrictions, as I've outlined, we need to close the border to the rest of NSW," Mr Miles told reporters.
"That will mirror the arrangements currently in place in Victoria, South Australia, Western Australia and Tasmania."
A new border bubble zone will be set up for NSW residents as far south as the Clarence River Valley and as far west as the SA border.
Mr Miles said the bubble would cover 17 local government areas where residents would be able to cross into Queensland for essential reasons such as work, education, caregiving or essential shopping.
Queensland will also continue a face mask mandate, due to end on Friday, for another seven days.
Masks must be worn at all times, including outdoors, unless people are eating or drinking.
Chief Health Officer Jeannette Young said a number of virus restrictions would be eased across Queensland, with one person per two square metres allowed in hospitality venues.
Currently, the capacity is one person per four square metres.
Up to 100 people will be allowed in private homes, up from 30 currently, and the number of guests allowed at weddings and funerals will go up from 100 to 200.
However, she said stadiums and ticketed venues would have to operate at 75 per cent capacity for the next month.
The mask mandate will now apply to people inside stadiums unless they're eating or drinking, due to concern about the Delta variant spreading like it did in the MCG.
South Australia
South Australia's Covid-19 outbreak has grown to 14 with just two new cases reported on Thursday.
The new infections are a brother and sister who both attended the Tenafeate Creek winery, north of Adelaide over the weekend.
Seven cases are now linked to the venue, which is considered one of two superspreader events, including a child aged under five.
SA's second superspreader site is The Greek restaurant in the city where a number of infected people dined last Saturday.
Premier Steven Marshall says he's very grateful the state moved into lockdown on Tuesday as waiting any longer would have led to a more dangerous situation.
"I'm still extraordinarily hopeful we can stop the spread of this disease over the seven-day lockdown period," he said on Thursday.
The growing cluster has prompted a huge increase in testing with 17,592 swabs taken on Wednesday, a record for a single day in SA.
The premier apologised for long delays at testing sites and understood that some people were frustrated at having to wait many hours.
But he said authorities were working hard to increase capacity.
The number of SA exposure sites has also grown to more than 70 with more than 10,000 people in quarantine.
SA's virus cluster is linked to an 81-year-old man who recently arrived in Australia from Argentina and was quarantined in Sydney before travelling to Adelaide, where he tested positive.
Genomic testing has confirmed the man became infected while in Sydney, not while in Argentina.
Under the week-long lockdown, which started on Tuesday evening, South Australians are only be allowed out for five reasons - to provide essential care, to seek medical assistance, to buy essential food and other goods, for essential work, or to exercise for up to two-and-a-half hours.
