A new case of COVID-19 has been diagnosed in a person who stayed in the same Sydney quarantine hotel where a security guard was infected last week.

Premier Gladys Berejiklian says the returned traveller was quarantining on the 11th floor of Sydney's Sofitel hotel where a security guard is believed to have caught the highly contagious UK virus strain last week from a hotel guest.

The ABC reported Ms Berejiklian revealed the new case on Wednesday but said the new case "doesn't change anything in Sydney" because the infected person has been in quarantine.

"The threat to the community is negligible because they haven't been out anywhere," she said.

"But having said that, it does mean we are still on high alert until the first 14 days passes and we can be sure that everyone who is tested and found to be negative stays negative."

"Health believes they acquired it after they went into the hotel so we are being upfront about that. They didn't have the virus when they came to the hotel," she said.

"It is only fair for us to classify this as community transmission although obviously, they're in quarantine and not in the community.

NSW Health said every guest on the 11th floor of the hotel had been re-tested and they were now investigating how the virus spread.

It is still not clear how the security guard contracted the virus as there were no obvious breaches of health protocols.

Meanwhile, NSW residents can finally stand at the bar and enjoy a cold one - just in time for St Patrick's Day festivities.

People in NSW are now permitted to stand and drink at a bar, as promised during the state's last round of restriction-easing last month.