Multicolored starbusts and gigantic sparklers lit the midnight sky over Sydney Harbour in a dazzling fireworks show witnessed by 1.5 million enthusiastic spectators who camped out all day to ring in the New Year.

Sydney touted its claim to be the New Year's Eve capital of the world with a spectacular display over the iconic Harbour Bridge using 7 tons of fireworks, its largest since 2000.

"Stunning, beautiful," said Cinthya Romo, 32, a Sydney-based interpreter from Chile who watched the 12-minute fireworks show from the Opera House.

"Sydney's best show yet," exclaimed George Stamp, who enjoyed the show with his children.

Luxury yachts and smaller boats filled the harbour to party on the water, while others crammed into pubs, clubs and only balconies with a view of the fireworks show.

At the Opera Bar Beach House, hundreds of people paid up to $500 for the view and a party with a beach theme.