Some 11,201 new cases were reported in NSW on Wednesday, almost double the state's previous record and just 53 short of the number recorded nationwide on Tuesday.
It's a similar story in Victoria, where the number of cases jumped by 1029 to a record 3767.
Tasmania also reported a record number of new infections, with 55 identified.
The good news is the number of PCR tests processed in both NSW and Victoria has begun to bounce back after unprecedented demand overwhelmed the system.
More than 157,000 tests were processed in NSW, an extra 64,000 compared to the day before.
In Victoria, the number of test results returned increased by more than 8000, to 75,132.
But testing clinics and pathology labs across the two states are still overrun, with tens of thousands of people waiting in lengthy queues to be swabbed for the virus.
By 9.20am on Wednesday more than 20 sites across the Melbourne metropolitan area had been closed after reaching capacity, with similar stories reported in NSW.
Both states have partially blamed "tourism testing" - a requirement that travellers have a negative PCR test before entering Queensland or Tasmania - for the mayhem.
But Queensland Premier Annastacia Palaszczuk on Wednesday resisted pressure to change the rules immediately, instead announcing the PCR test requirement would be scrapped in favour of rapid antigen testing (RAT) from January 1, as expected.
But NSW Premier Dominic Perrottet on Tuesday urged her to bring the change forward to provide much needed relief to testing clinics now.
"There are people getting tests who don't have any symptoms, are not feeling unwell, that are required to get tests and taking the place of people who are unwell or who are required to get a test from NSW Health," he said.
However, RAT kits are in short supply in some states, with people in NSW reporting they are near impossible to buy.
Minister for Emergency Management David Littleproud on Wednesday said the federal government is working on a funding arrangement with the states to provide RAT tests for free, as is done in the United Kingdom.
The cost of testing has been split 50-50 throughout the pandemic so far, but the federal government has been hamstrung by some state's refusing to accept RAT tests as a substitute for PCRs, he said.
"That's why we haven't kicked the tin for it," he told Sky News.
"But if the states and the health advice says that this is the track we should go down, then obviously through the national cabinet mechanism we'll work through that together."
Queensland on Tuesday also removed the requirement for interstate travellers to get a PCR test on day five of their time in the state, after only 0.6 per cent of results were positive for the virus, from tens of thousands of swabs.
Queensland case numbers also surged past 1000 for the first time on Tuesday, while South Australia hit a new daily record of 995 infections.
