Australia's two largest states reported sharp increases in new Covid-19 cases on Wednesday, a blow to hopes that lockdown restrictions would be lifted with more than half the country's population under stay-at-home orders.

New South Wales (NSW) state, home to the country's most populous city Sydney, logged 110 new cases, up from 78 the day before, nearly four weeks into a lockdown of the city and surrounding areas to contain an outbreak of the virulent Delta variant.

Victoria state clocked 22 new cases, from nine the day before, its biggest increase...