SYDNEY: Large crowds thronged Sydney harbour on Tuesday to watch Australia's famous New Year's Eve fireworks, even as smoke from deadly wildfires turned skies in nearby coastal towns blood-red.

The planned spectacle is going ahead despite calls from some members of the public for the fireworks to be cancelled, in solidarity with fire-hit areas in New South Wales (NSW) of which Sydney is the capital city.

Elsewhere in Australia, thousands of people were trapped on the country's east coast by fierce fires, as the government readied naval vessels and military helicopters to aid firefighting and evacuations.

"Tonight we expect a million people around the Harbour and a billion people around the world to watch Sydney's New Year Eve celebrations, which is Australia's biggest public event," City of Sydney mayor Clover Moore told reporters.

Responding to calls to cancel the event and reallocate the funding to fire-affected regions, Moore said planning for the fireworks began 15 months ago and most of the budget had already been allocated. The event was also a boost to NSW's economy.

Moore added that people viewing the fireworks around the harbour will see a donation link projected onto the Sydney Harbour Bridge pylons throughout the night.

Some tourists trapped in Australia's coastal towns posted images of blood-red, smoke-filled skies on social media. One beachfront photograph showed people lying shoulder-to-shoulder on the sand, some wearing gas masks.

The weather in Sydney was relatively mild, although its skies were still cloaked in smoke from nearby fires.

The fires have spread across four states, with fronts stretching hundreds of kilometres in some cases. They have killed 11 people since October and left many towns and rural areas without electricity and mobile coverage.

"Many of us have mixed feelings about this evening, but the important thing we take out of this is that we're a resilient state," NSW Premier Gladys Berejiklian told reporters.

"I don't want to take a second away from the deep sense of loss and tragedy many people are feeling."

Worryingly, by Tuesday evening the bushfires had reached Western Sydney, some 30 km away from Sydney Harbour Bridge, with an emergency warning issued for an out-of-control blaze burning in the suburb of Greystanes.

Fires so close to Australia's largest city sparked anger among some residents.