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Three farms are under lockdown and thousands of poultry have died after bird flu was detected in Sydney's outskirts.
An emergency biosecurity incident was declared yesterday after the avian influenza strain H7N8 was found at a commercial egg farm in the Hawkesbury region.
The outbreak is believed to have come from wild birds and is different to the strains found in Victoria.
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Agriculture Minister Tara Moriarty today said 8000 birds have died from the virus and another 240,000 will be culled in the coming days to stop the spread.
"Last night we started depopulating the farm, in a humane manner, following Australian veterinary guidelines," she said.
The infected egg farm has been locked down and a control order will be issued to stop movement within a two-kilometre radius of it.
"The localised lockdown order will cover three large commercial poultry farms and impacts up to 355,000 birds that we will monitor for any signs of the virus," Moriarty said.
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"There will be no movement of eggs or birds or machinery out of the zone during the control order."
Moriarty assured consumers that bird flu does not pose a health risk through eggs and egg products on supermarket shelves.
"As always, people should handle and cook using the standard procedures," she said.
The state government has activated compensation funds, which will be available to those producers affected by the bird flu.
"We are acting on this bird flu outbreak and will do everything to work through this challenging time for the egg and chicken meat industry," Moriarty said.
"We have their backs."
