SYDNEY: Sydney's cafes, restaurants and pubs are set to reopen in the second half of October after months of strict COVID-19 lockdown, even as the Prime Minister warned higher case numbers will follow the easing of curbs and leaders must "hold their nerve".

Authorities said Sydney bars and eateries, as well as gyms, across the city of five million people will be able to reopen at reduced capacity within days New South Wales (NSW) reached a 70% double-vaccination target, now expected around mid-October.

Stay-at-home orders for the fully vaccinated will be lifted on the Monday after the target is achieved, the officials said.

The plans come as daily infections linger near record levels in NSW amid a spread of the highly transmissible Delta variant, with the state registering 1,405 new local cases on Thursday, down from 1,480 a day earlier. Five new deaths were recorded.

"Living with COVID means you have a cautious and staged reopening once you get to those high rates of vaccination in your adult population," NSW state Premier Gladys Berejiklian said during a media briefing in Sydney, the state capital.

Berejiklian expects cases to rise when restrictions ease and warned of localised lockdowns if "there is a concentration of disease in any suburb." Lockdown rules in several regions outside greater Sydney have been lifted from Saturday after low case numbers there.

Under the plan, pubs and cafes in Sydney could reopen before schools, which will begin classes for younger aged-groups from Oct. 25.

"(School reopening) date is fixed because we need to provide certainty and planning for school communities ... but for adults, we have the capacity to be more flexible," she said.

Berejiklian had initially pursued a COVID-zero strategy to quell an outbreak of the highly contagious Delta variant that began in mid-June, but has since shifted to focusing on increasing inoculation rates.

About 43% of the population above 16 in the state, Australia's most populous, have been fully vaccinated, slightly higher than the national average of 40%.

Sydney's staggered reopening plans bring some certainty for businesses, with lockdowns in Sydney and Melbourne, Australia's largest cities, threatening to push the A$2 trillion ($1.47 trillion) economy into its second recession in as many years.

Prime Minister Scott Morrison said on Thursday the reopening efforts of New South Wales align with the four-stage national plan unveiled in July that promised more freedoms once the country reaches 70%-80% inoculation. read more

"The next stage will be hard we'll see case numbers rise and that will be challenging," Morrison said in Canberra. "But if you want to live with the virus you inevitably have to pass down that tunnel."

Morrison urged state leaders to "hold their nerve" when they begin to live with the virus, although some virus-free states have hinted they may delay their reopening even after reaching higher vaccination coverage.