Premier Peter Gutwein announced that the region would be considered "medium risk" in light of the continued community transmission in the lead-up to Christmas.

The measures come into effect from midnight tonight.

The northern beaches remains "high risk".

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Travellers will be able to transit through Sydney Airport on their way to Tasmania without needing to quarantine, provided they do not leave the "airport precinct".

However, as the airport is in the identified medium risk region, as soon as travellers leave the airport terminal they will be required to quarantine upon return to Tasmania.

Mr Gutwein said the measures were introduced as a result of the northern beaches cluster and "an increasing number of risk locations across Sydney".

"Importantly, I'm certain that there will be further advice provided by the NSW Government in terms of this on an ongoing basis," he said.

"Cases associated with this cluster have been in other parts of Sydney.

"There is every likelihood that the number of cases will increase."

No decision has been made on the Sydney to Hobart Yacht Race, although the Premier said that the rules apply to anyone arriving in Tasmania whether "by a plane, a yacht or a boat".