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The cases were diagnosed from 96,765 tests processed in the 24 hours to 8pm on Sunday.
It's a rise of 2516 from the previous day's tally, but still short of the peak of 22,577 on New Year's Day.
There are currently 1204 people in NSW hospitals with the virus, up from 1066 the day before.
Intensive care numbers have jumped by 12 to 95 overnight.
However, a new small study shows that not all those in hospital with coronavirus were admitted for treatment for Covid-19.
Some patients in hospital with Covid-19 were admitted for unrelated illness or injury, a small sampling of patients in two local health districts taken by NSW Health over the past two weeks shows.
Among the people being counted as Covid-19 hospitalisations are women in labour, people seeking mental health support and care, and people with appendicitis or bowel obstruction, NSW Health said in a statement.
The agency did not respond to questions about whether a similar proportion of hospitalisations during the Delta wave was primarily for other reasons.
"It is to be expected that as Covid-19 cases in the community increase some patients will present with conditions other than Covid-19 as their primary reasons for seeking health care," a NSW Health spokesperson said in a statement.
In any case, the health system is under pressure due to staff shortages amid rising hospitalisations.
Australian Medical Association vice president Chris Moy said the system was "struggling" with staff shortages as case numbers rise and health workers fall sick, test positive or are identified as close contacts.
"People look at the numbers and see the 1066 in hospitals but the health system doesn't just look after Covid and people are having critical surgery delayed," he told AAP.
At the peak of the Delta outbreak on September 21, there were 1266 people hospitalised with infections, and 244 in intensive care.
A NSW Health spokesperson said as of December 30, 2510 healthcare workers were in isolation after being exposed to Covid-19.
Exemptions may be given in exceptional circumstances for healthcare employees who are deemed critical and who cannot work from home but only if they are asymptomatic, the spokesperson says.
Dr Moy said NSW Health's policy change showed the "desperation" to fill up rosters.
Some 93.6 per cent of adult NSW residents have now had two doses of a Covid-19 vaccine, while the 12-to-15-year-old age bracket has moved to 78.2 per cent having received two doses.