Temperatures are forecast to peak on Tuesday, with the mercury likely to rise past 40C across western Sydney and in regional NSW.

NSW Rural Fire Service Commissioner Shane Fitzsimmons says deteriorating bushfire weather conditions are expected over the coming days.

However, he says Sydney's New Year's Eve fireworks display is unlikely to be canned despite concerns about bushfires.

A total of 95 fires were burning in NSW on Sunday afternoon with 48 not contained.

Some 2300 firefighters were in the field on Sunday, using the "benign" weather to strengthen containment lines, the RFS said.

Severe fire danger ratings are in place on Monday for the southern Riverina, the southern slopes, the Monaro alpine region, the southern ranges and the far south coast.

Mr Fitzsimmons said these conditions would worsen on Tuesday.

"We can expect a broad geographic area of extreme fire danger ratings, which will extend through places like the southern ranges, the Illawarra south coast and probably down through to the Monaro area, down through the high country," he told reporters.

The RFS is concerned about the Gospers Mountain and the Grose Valley fires northwest of Sydney, the Green Wattle Creek fire southwest of Sydney, and the Currowan fire in the Shoalhaven region.

Dry lightning storms and thunderstorm activity have created a number of new fires over the weekend, Mr Fitzsimmons said.

This includes one blaze near Tarcutta in the Snowy Valleys, which was on Saturday afternoon raised to "emergency" level as it burned erratically towards the east but has since been downgraded back to "advice".

More thunderstorm and dry lightning activity is expected on Sunday afternoon, Mr Fitzsimmons said.

"There is every prospect of new fires as we head into the deteriorating weather conditions over the coming days," he said.

"The work of the crews in the field ... on establishing and consolidating containment lines, ahead of the deteriorating weather conditions over the next two days has been quite remarkable in this last week and particularly through Christmas Day (and) Boxing Day."

The worsening bushfire conditions are expected to result in poor air quality for Sydney on Monday.

The RFS on Sunday morning announced the Grose Valley fire, currently affecting the Blue Mountains region, had been contained following "extraordinary work" by crews over the Christmas period.

"Crews will continue to monitor containment lines over the coming days and mop up and black out any hotspots," the RFS posted on Twitter.

The federal government, meanwhile, has announced RFS volunteers battling long-running blazes could receive up to $6000 in financial support.

The payments of up to $300 per day will be available to RFS volunteers who are self-employed or work for small and medium-sized businesses.

The payments will be capped at $6000 per person and tax-free.

Prime Minister Scott Morrison said the payments would be equivalent to 20 days of emergency leave for eligible volunteers.

"This is a very prolonged fire season," Mr Morrison told reporters on Sunday.

"This is putting additional demands on our firefighters, in particular, and it means that the turnouts and call-outs have been far more extensive than in previous years, going well and beyond and above what is normally expected of those who are engaged in volunteer service."

Two firefighters have been killed this fire season and as many as 1000 NSW houses destroyed.

Australian Associated Press