The $400 million luxury liner, which has capacity for almost 2000 passengers, arrived in Sydney on Monday morning following a 28-day voyage from Europe, where it has been anchored for most of the past two years.

The P&O Australia ship, sporting huge banner at the bow reading "We're Home", was welcomed into the harbour with a ceremonial "water cannon salute" before docking surrounded by tugboats.

Marguerite Fitzgerald, president of P&O Cruises Australia, said the "emotional homecoming" marked the start of rebuilding Australia's $5 billion a year cruise industry.

"Pacific Explorer coming through Sydney Heads after two long years was a magic moment and I am proud to say there was hardly a dry eye among our suppliers, guests and staff," she said.

The Explorer's return to full service will coincide with that of Ponant's Le Laperouse, which will begin operations between Darwin and Broome on April 28, joining local operators in time for the Kimberley cruise season.

Federal biosecurity measures barring entry of cruise ships and mandating COVID-19 tests for inbound travellers lapsed on Sunday.

NSW, Victoria and Queensland have outlined testing and vaccination requirements for passengers and crew in preparation for the ships to return.

However, Tasmania is still reviewing whether such a move is safe for the island state.

Cruise Lines International Association Australia says the lifting of the ban will see "a carefully managed resumption of operations" in a sector that previously supported more than 18,000 jobs.

Its Australasian managing director Joel Katz said before the pandemic more than a million Australians a year took an ocean cruise, and extolled on-board safety measures to curb future outbreaks.

"While no setting is immune from COVID-19, the cruise industry's new protocols provide among the highest possible levels of prevention, detection and mitigation," he said.

The move comes despite COVID-19 infections remaining high.

Almost 36,000 new cases were reported across the nation on Monday, along with 10 virus-related deaths.

LATEST 24-HOUR COVID-19 DATA FROM ACROSS AUSTRALIA:

NSW: 11,166 cases, four deaths, 1576 in hospital, 67 in ICU

Victoria: 7918 cases, one death, 431 in hospital, 30 in ICU

Western Australia: 5605 cases, no deaths, 227 in hospital, six in ICU

Queensland: 5141 cases, four deaths, 551 in hospital, 19 in ICU

South Australia: 3560 cases, no deaths, 245 in hospital, 11 in ICU

Tasmania: 1372 cases, no deaths, 44 in hospital, one in ICU

ACT: 734 cases, no deaths, 58 in hospital, two in ICU

Northern Territory: 386 cases, one death, 30 in hospital, two in ICU

Australian Associated Press