Travel restrictions between Canberra and Sydney's northern beaches will be lifted at 3pm Tuesday.
Anyone who was forced to quarantine after recently being in the area will no longer have to.
ACT Chief Minister Andrew Barr said there would be 75 people who could be released from quarantine.
However 10 local government areas in western Sydney will remain hotspots. Mr Barr expected those rules would remain for another week.
Non-ACT residents who have visited those areas will still be banned from entering the territory without an exemption.
Canberrans who have been in those areas in the past fortnight can come home but are required to quarantine for 14 days upon return.
"ACT Health will continue to monitor the situation closely day by day," Mr Barr said.
A COVID-19 checkpoint will be reached on Friday when further announcements will be made about the Australia Day long weekend.
Chief health officer Kerryn Coleman said the banned areas still posed a risk to the ACT and the decision to remove the northern beaches was consistent with that of Victoria.
"It's not just about those locations themselves, it's about looking at where people live and where people move," she said.
"When you have a look at western Sydney and greater western Sydney there's actually quite a lot of movement around quite a few [local government areas] and then there's a bit of a buffer there to give us reassurance."
Australian Hotels Association ACT general manager Anthony Brierley welcomed the move, but said the industry was still bearing the brunt of lost trade over Christmas holidays.
"The restrictions on travel Greater Sydney wiped millions of dollars out of Canberra's accommodation industry," he said.
"The speed with which cancellations came through was as bad as March 2020, when COVID really kicked off.
"Canberra's hotels are currently operating at 25 per cent occupancy.
"While the easing of travel from Greater Sydney including the northern beaches is welcome, we have likely lost the visitation that was scheduled to occur during people's Christmas breaks."
The banned local government areas are:
- Blacktown City
- Canada Bay City
- Fairfield City
- Inner West
- Liverpool City
- Paramatta City
- Strathfield Municipality
Canberrans have also been urged to get tested amid a drop in daily numbers after it rose to more than 1000 per day amid the Sydney outbreak.
There have been 471 tests in the past 24 hours.
Dr Coleman said the recent daily total of 200 to 300 tests a day was not enough and wanted testing numbers to increase to between 700 and 1000 a day.
There have been more than 150,000 coronavirus tests conducted in the ACT throughout the pandemic.