New South Wales is expected to be hit with another severe heatwave this weekend, with Sydney's outer areas forecast to reach temperatures of more than 40 degrees Celsius on Australia Day.

Australia Day hotspots: Penrith 41C

Penrith 41C Wilcannia 45C

Wilcannia 45C Bourke 46C

Bourke 46C Gundagai 44C

Gundagai 44C Dubbo 43C

The Bureau of Meteorology (BOM) said temperatures would reach severe heatwave conditions on Saturday and Sunday.

In Penrith, the mercury is likely to reach 42C on Australia Day, while Sydney's CBD (33C) and Bondi (29C) will be more mild.

Sydney is expected to reach a top of 33 degrees on Australia Day and in Penrith, it is likely to hit 42C.

In the state's Riverina region, Hay is forecast to soar to 48C tomorrow and on Saturday Cobar, in the central west, is expected to reach 45C.

NSW Health is urging the community to be prepared for the severe heat event as thousands of people flock to Australia Day events across the state.

At an all-day celebration in Parramatta Park on Saturday, the mercury is likely to reach 38C.

Several festivals are also scheduled for the weekend including the Electric Gardens festival in Centennial Park, which has a capacity of about 30,000 people.

The Hard Core Til I Die music event will also take place on Saturday at the Sydney Showground, where temperatures are likely to reach 37C.

A cool change is expected early next week.

The heatwave follows another string of sizzling days last week, when temperatures in regional sites passed 46C.

Rebecca Farr from the BOM said the sweltering weather was caused by hot air making its way over the state from northern Australia.

She said overnight temperatures were also expected to remain high this weekend.

"For Sydney on Friday night it will be 23 and on Saturday night it will also be 23 and that's remaining pretty constant," she said.

"So even though the daytime temperatures will ease into next week the night-time temperatures will remain similar, so we won't be getting significant relief overnight which I'm sure we'll all feel."