Figures released yesterday reveal there are more than 3700 properties in the state with infected horses. More than 700 other properties are considered either "dangerous contact" or "suspect".
In Queensland, no precise figure for infected horses has been given, but state authorities confirm there are 781 infected properties.
The news comes as both states continue their rollout of vaccine in buffer zones to bolster containment efforts.
NSW Primary Industries deputy chief veterinary officer Steve Dunn said the co-operation and community support for the vaccination programme has been outstanding.
"Individual horse owners have gone out of their way to work with us, co-operate and help," he said.
"As we roll out the vaccination campaign we are being welcomed by horse owners who are happy to have their horses vaccinated."
Mr Dunn said staff are investigating how the disease spread to a property at Barmedman, in the previously disease-free green zone, where two horses have tested positive.
The property is between West Wyalong and Temora, about 40km from the boundary of the amber zone.
"The horse owners in this case took early action by reporting their sick animals immediately, which hopefully will give us a better chance of preventing further spread," Mr Dunn said.
"A red zone is being declared around the property and the amber zone will be extended further west and south. This will unfortunately restrict the movement of some horses which were recently given greater freedom to move when the zones were declared."
He said it was important to keep as much of NSW free of the disease as possible.
"This setback reinforces the need for strict biosecurity when people come in contact with horses," he said. "The horse flu virus is very contagious because it can live on your body and your clothes for up to 48 hours and can be transmitted from humans to horses."
In Queensland, a potential problem with a batch of 4800 vials of vaccine resulted in the state requesting a fresh supply. The second shipment arrived at the weekend and has been distributed.
Biosecurity Queensland chief veterinary officer Ron Glanville said the problem was discovered with a shipment that arrived from Sydney by private contractor on Saturday morning.
One of two temperature sensors indicated the shipment had been below two degrees. As a live vaccine, they must be maintained at between two and six degrees. The drop in temperature could reduce or even nullify the effectiveness of the vaccine. It was feared the vaccine may even have been frozen.
Dr Glanville said it was possible the sensor had malfunctioned. While this was being investigated, Biosecurity Queensland was not prepared to distribute a vaccine in which they did not have complete confidence.
He confirmed the number of infected properties at 781. "From a disease-control perspective, the actual area bounded by known infected properties is a better indicator of progress than the number of infected properties.
"This area is still expanding, which highlights again the need for everyone to play their part in controlling this highly contagious disease."
People must report sick horses, he said. "We rely on people doing the right thing not only for their own horses, but for all the horses in their community."
Several officials from Queensland's Department of Primary Industries, including Director General Jim Varghese, attended a rally at Ipswich at the weekend, where up to 3000 people gathered to protest the handling of the outbreak.
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