Bushfires sweeping through prime koala habitat in New South Wales may have killed as many as 350 of the iconic native marsupial, conservationists say.

The blaze, near Port Macquarie in northern NSW, has burned through thousands of hectares including an important koala breeding ground.

On Thursday wildlife researchers visited some of the area destroyed in the bushfire, but only located two living koalas in a search of about 100 hectares.

It has led to fears hundreds of the animals may have been killed.

“It is a known koala breeding ground for the Port Macquarie region [and] the area we are most concerned about is a high density koala population,” the Port Macquarie Koala hospital president, Sue Ashton, told Guardian Australia.

“It is still burning and we probably won’t be able to access it until Saturday at the earliest [but] from our data crunching and based on a 60% mortality rate we will probably lose about 350 koalas.

“It’s an absolute tragedy.”

The koala is already listed as vulnerable in NSW and the animal has been threatened by urbanisation and habitat destruction. Such a significant loss of habitat is a hammer blow to the species.

“It’s a national tragedy because these are a genetically diverse population of koalas, they are a lot more adaptable to change [and] their bloodlines are very good and strong so they make great candidates for research and breeding,” Ashton said.

The blaze, which has been burning for several days, broke containment lines on Tuesday. It has now burnt more than 2,600 hectares of bushland and is continuing to spread, the Rural Fire Service said on Thursday.

Sydneysiders, meanwhile, woke to another smoky day as haze from the mid-north coast fires causes poor air quality as far south as Bowral.

The Department of Environment declared air quality in Sydney as “poor” due to particles, and those with a chronic respiratory or heart condition have been encouraged to avoid outdoor activity and stay indoors.

The RFS said there were 70 fires burning across the state with 44 uncontained.