Byron Bay's Bluesfest has been cancelled thanks to the Queensland Covid outbreak that has spread to the idyllic coastal town.

The popular annual music festival was set to be one of the biggest the world has seen since the pandemic - but has been called off at the last second due to fears the carnival could lead to a super-spreader event.

New South Wales recorded one coronavirus case overnight after an infected nurse working in Brisbane attended a hen's party in Byron Bay over the weekend.

Bluesfest has become the first major casualty of the new case as the holiday destination now regresses into tight restrictions to prevent further cases.

Artists that were due to play over the weekend included Jimmy Barnes, Tash Sultana John Butler and Pete Murray.

Organises behind Bluesfest are believed to be looking to relocate the festival to better days rather than cancel the event completely.

NSW Health Minister Brad Hazzard confirmed the news on Wednesday afternoon acknowledging it was 'disappointing' but in the best interests of the state.

'Infectious Queensland travellers attended a number of venues in the Byron Bay area and the new locally acquired case was infected at one of these venues,' a statement released by Mr Hazzard said.

'NSW Health acknowledges that the cancellation of Bluesfest is disappointing for ticket holders and event organisers.

'However while urgent investigations and contact tracing are ongoing, NSW Health is adopting a cautious approach to keep everyone safe.'

The northern NSW man aged in his 20s tested positive on Tuesday night after sitting within close proximity to an infected hen's party from Queensland at the Byron Beach Hotel last Friday. He is now in isolation.

Premier Gladys Berejiklian has announced new rules for the far northern NSW holiday hotspot and the surrounding Ballina, Tweed and Lismore local government areas, which come into effect 5pm Wednesday and continue over the Easter long weekend until midnight April 5.

Gatherings in homes, including holiday rental properties have been restricted to a maximum 30 people in the four northern NSW local government areas.

Public indoor settings including hospitality venues must revert back to the one person per four square metre rule while the wearing of masks in shops, public transport and taxis will be mandatory.

More venues in Byron Bay have also been added to NSW Health's COVID-19 exposure site list, including a burger bar, surf shop and women's clothes store.

Two Ballina venues have also been added after the NSW case attended a tavern and golf course while unknowingly infectious on Sunday March 28.

Anyone who attended the Henry Rous Tavern on Sunday between 1.20pm- 2.20pm or the ?Ballina Golf and Sports Club pro shop 2:25pm-2:35pm must immediately get tested and self-isolate until further advice is provided by NSW Health.

NSW Health has adopted a cautious approach to minimise the risk of further transmission.

'We want you to limit the number of people that come to your home to 30 and, as we know, during this time of year, there may be house parties or other events,' Ms Berejiklian said on Wednesday.

'We want all of those limited to 30 and please make sure you have a list of everyone who attended or is attending your home.'

All public indoor settings, including hospitality venues must revert back to the four square metre rule, where customers must stay seated at all times.

'The positive news in all of this is we're not saying to businesses shut your doors, quite the opposite,' Ms Berejiklian said.

'We are saying you can keep your doors open but because of the risk that is there, we want you to be extra cautious.

'Until the end of Easter, you are able to keep your doors open but make sure you revert to the four square metre rule and make sure that all of your patrons are seated and not standing up and mingling.'

'Given what has been identified since 8pm last night, the community and our citizens would understand why we are taking these measures.'