States are snapping shut their borders on Sydneysiders after a COVID outbreak in the city’s east grew to at least three cases on Thursday.

With school holidays just days away, millions of Sydney residents face cancelled plans and further coronavirus rules, with health authorities on high alert for the virus to spread across the suburbs.

The outbreak emerged with two local COVID-19 cases – a husband and wife – detected on Wednesday. The man, who is in his 60s and lives in Bondi, is an airport driver but it is not yet known how he contracted the virus.

A third person – a woman in her 70s – was confirmed with the virus on Thursday. She is believed to have contracted it after visiting the Belle Cafe in Vaucluse on the same day as the airport driver.

There is also a potential fourth community case in Sydney. A man in his 40s from the Baulkham Hills area, in the city’s north-west, has returned a weak positive test – authorities are investigating whether it might be a false positive or from a historic infection.

Sydneysiders have been urged to avoid large gatherings unless absolutely necessary and to don masks on public transport as health authorities try to chase down the latest infections.

NSW Health Minister Brad Hazzard said it was concerning that transmission of the virus had occurred outside a household.

“We’ve already heard that one lady happened to be in the wrong place at the wrong time and got the virus,” he said on Thursday.

“That could happen to any one of us. Take it seriously.”

Tweet from @NSWHealth

Police are investigating whether the Bondi man breached any health orders. Those working on the front-line of hotel quarantine system are required to be tested for the virus daily.

However, the man was first tested for the virus on June 15, when he returned a positive reading. It’s unclear when he began working in the system.

Mr Hazzard refused to comment on the police investigation into the driver but said all those involved in airport transport had legal obligations.

“The virus right now is more dangerous than it has ever been across the world,” he said.

“Being slack about what the health authorities ask you to do is just inexcusable.”

The Bondi driver has been confirmed to have a strain of the Delta variant of the virus that has not previously been seen in Australia.

Authorities believe he has been infectious since last Friday.

If the outbreak worsens, NSW might be forced to impose virus rules ahead of the school holidays, which begin on June 26. Beyond NSW, other states – including Queensland and Tasmania – have already begun to restrict arrivals from Sydney.

On Thursday, Premier Gladys Berejiklian urged Sydneysiders to be cautious, warning that two cases could quickly become 20.

“Unless you absolutely have to attend a large gathering, unless you absolutely have to engage in activities of a social nature … we ask everybody to refrain from that,” she said.

“Be extra careful, make sure you hand sanitise and socially distance.”

“Assume that everybody you’re in contact with has the virus and assume you have the virus yourself – that’s the best advice we can give you.”

More than 700 close contacts are in isolation after this week’s positive cases were confirmed. More than a dozen exposure venues have also been identified, with more added on Thursday.

• See an updated list of NSW venues here

They include Events Cinema, Myer and David Jones in Bondi Junction, cafes in Vaucluse and North Ryde, a car wash in Redfern and a fruit and vegetable shop in Zetland.

Investigations are also underway into a potential hotel quarantine breach at Sydney’s Radisson Blu hotel, after three people in two adjacent rooms returned the same viral sequencing results.

School holiday plans cancelled as states close borders

Also on Thursday, other states moved to shut down travel from Sydney amid fears the virus might spread.

Tasmania, the ACT and South Australia have barred entry to anyone who has been to an exposure site.

Travellers heading to Western Australia must get tested and self-quarantine for 14 days from their date of exposure, while arrivals in the Northern Territor will go into supervised quarantine.

Queensland has introduced a “traffic light” interstate travel system similar to the one also used in Victoria.

From 1am on Saturday, all arrivals to the sunshine state will need a declaration pass confirming they have not attended a hotspot in NSW.

“A green pass indicates the individual has not been to any COVID hotspot and can travel freely into the state,” Health Minister Yvette D’Ath said.

“An amber pass will be issued in the circumstances that someone is travelling to Queensland and has been to an interstate exposure site and applies particular quarantine conditions on the person when they arrive.”

Declared hotspots are red zones with no travel permitted and exemptions will apply to residents in border communities.

More than 70 flights from Sydney were expected to touch down in Queensland on Thursday.

Queensland’s restrictions on arrivals from greater Melbourne will also remain for at least another week. Victoria had no new coronavirus cases on Thursday, ahead of a further relaxation of restrictions.

-with AAP