The City of Sydney's famous celebrations are expected to attract one million people to the harbour foreshore and generate $130 million for the NSW economy.

Temperatures around the state are expected to peak on Tuesday, with forecasts of more than 40C across western Sydney and in regional NSW.

Some communities have decided to cancel or postpone their fireworks displays, including Armidale in the state's northern tablelands and Huskisson on the state's south coast.

More than 250,000 people have signed a petition calling for the fireworks to be scrapped, and its funding redirected to NSW drought and bushfire relief.

However, City of Sydney spokeswoman Tanya Goldberg says the council is of the "firm view" the event should proceed.

"Preparations began 15 months ago which means that most of the budget, largely used for crowd safety and cleansing measures, has already been spent," she told reporters on Sunday.

"Cancelling would have little practical benefit for devastated communities."

A council spokesman said they would work with authorities if a total fire ban was declared for Sydney on New Year's Eve.

RFS Commissioner Shane Fitzsimmons said he "can't foresee the Sydney New Year's Eve efforts being compromised by a total fire ban".

The RFS will be working with the Bureau of Meteorology closer to Tuesday, however a southerly change is expected to impact upon the Sydney basin about 7pm and move through the region over several hours, Mr Fitzsimmons said.

This will mean hot temperatures and dry, windy conditions will improve, "but we're obviously very mindful of the volatility" of the wind, he told reporters in Sydney on Sunday.

"I don't remember a time when we've had total fire bans in place in the greater Sydney region where we haven't been able to accommodate the risk elements for conducting the New Year's Eve fireworks in the in the Sydney Harbour area particularly," he said.

"If there are areas, subject to the prevailing winds ... where materials might drop, we just heighten our level of coverage to ensure a safe and effective New Year's Eve function."

The RFS has, however, warned residents to shelve their own private fireworks displays on New Year's Eve.

"The NSW RFS is also encouraging local councils to work with them regarding planned community firework displays, to discuss the feasibility of these displays in order to ensure the safety of communities," the RFS said in a statement on Sunday afternoon.

Prime Minister Scott Morrison said he acknowledged the anxiety around the issue but said in the midst of challenges faced by the country, "subject to the safety considerations, I can think of no better time to express to the world just how optimistic and positive we are".

"I tell you what I really want to acknowledge and that's how wonderful a country Australia is and on New Year's Eve that's what we tell the world with that amazing display about our optimism and our vibrancy," Mr Morrison told reporters.

Premier Gladys Berejiklian said if the RFS and experts say it's safe for fireworks to go ahead, then they should.

"Sydney is one of the first cities in the world that welcomes in the new year and if it's safe to do so, we should continue to do it as we've done every other year."

Other events across NSW could have higher risk and the RFS is unlikely to give exemptions for backyard permits for fireworks in homes or local parks, Mr Fitzsimmons said.

Australian Associated Press