NSW has reported 165 new cases of COVID-19 and one death as hospitals were given the green light to resume elective surgery at full capacity.

The locally acquired cases were logged in the 24 hours to 8pm on Sunday and the total was down 30 on the previous day's tally after 50,453 tests.

The number of infected people who are in hospital fell by eight to 216, with 32 in intensive care and 15 on ventilators.

Some 94.2 per cent of people aged 16 and over had received a first dose of a COVID-19 vaccine, and 91.1 per cent are fully vaccinated.

In the 12-15 age group, 80.6 per cent have had their first dose while 73.5 per cent have had both.

The latest casualty of the pandemic was a fully vaccinated woman in her 80s with underlying health conditions, who died at Sydney's Royal Prince Alfred Hospital.

She was a resident of the Presbyterian Aged Care nursing home at Ashfield in Sydney's inner west, where she acquired her infection.

It's the first virus death linked to an outbreak at the facility.

NSW Health announced last week elective surgery could resume unrestricted because of the state's high vaccination rates and stable levels of community transmission.

NSW AMA president Danielle McMullen said the backlog caused by months of restrictions in hospitals could now be addressed.

"The easing of these caps means hospitals and other health services can arrange their catch up work and their usual non-COVID work ... and be able to participate in as much elective surgery as they can," she told Sydney radio 2GB on Monday.

Meanwhile, the Hunter New England region continues to be the state's biggest COVID-19 hotspot with 44 new cases.

There were 35 cases from southwest Sydney, 24 from western Sydney, 17 from southeastern Sydney and 13 are from the Murrumbidgee Local Health District.

Meanwhile, Labor and unions have criticised a NSW government plan to roll back a special COVID-19 protection for workers as harsh and unnecessary.

Premier Dominic Perrottet intends to scrap a provision in the state's Workers Compensation Act that assumes frontline workers who test positive for the virus caught it while on duty.

The government estimates keeping the protection could invite 25,000 extra claims over the next 12 months, forcing insurance premiums up by an average of $950.

COVID-19 claims could cost the compensation system as much as $638 million over the coming year.

The NSW Nurses and Midwives' Association says its members, who face a heightened risk of exposure from patients, visitors and other colleagues in their workplaces, are outraged by the move.

General Secretary Brett Holmes said upper house members of parliament received more than 24,800 emails from public sector nurses and midwives over the weekend, begging them to block the government's planned repeal. A further 590 emails were sent to lower house MPs.

"Despite their efforts to go above and beyond for the past 22 months, essential workers who are infected with COVID-19 will face significant hurdles if this repeal goes ahead," Mr Holmes said in a statement on Monday.

But business groups are welcoming the planned removal of the provision, which will make it harder for workers in retail, healthcare, hospitality and other frontline industries to file compensation claims if they get sick.