More than 25,000 Australians stuck overseas might not make it home for Christmas unless a cap on international arrivals is lifted.
States are under pressure to boost the capacity of their hotel quarantine schemes to allow more people to return.
The federal government has also been challenged to find a creative fix.
Only 4000 international travellers can enter Australia each week and the majority fly into Sydney.
NSW Premier Gladys Berejiklian has challenged other states to take their fair share of Australians returning from overseas.
“NSW welcomes back around 2500 people every week, and we know the hotel quarantine system in NSW is managed well, but we’re doing so much more than all the other states combined,” she told reporters on Monday.
“I just say to other states, I’m sure many of our Aussies overseas wouldn’t mind flying into Brisbane or Perth or even Adelaide, and then getting a domestic flight back to their homes.”
Labor says the Commonwealth should take responsibility for quarantine arrangements, pointing out federal facilities have been used to accommodate people returning from China and Japan.
Opposition frontbencher Kristina Keneally said the Morrison government was attempting to handball its duties to the states.
“If the Commonwealth government is serious about getting stranded Australians home, they need to step up, show leadership and put a plan in place,” Senator Keneally told ABC radio.
“It is the Commonwealth’s responsibility to assist stranded Australians in the middle of a global, deadly pandemic, who are stuck overseas.”
State borders closed to contain the spread of coronavirus are also in the national spotlight.
Nationals MP Barnaby Joyce described Queensland’s hardline border measures as a sham after American actor Tom Hanks was allowed to enter the state.
Hanks returned to Australia earlier this month to finish shooting a film, quarantining at a Gold Coast hotel with 11 other family, cast members and production staff.
Their entry was approved by the federal home affairs department at the request of the Queensland government.
“It’s in stark contrast to people who can’t go to funerals, and that’s what aggravates me so much,” Mr Joyce told the Seven Network.
“We’ve got the AFL in there first class, we’ve got Tom Hanks in there, we’ve got his offsiders in there, but we can’t get a person across to see their dad buried.”
Deputy Chief Medical Officer Nick Coatsworth acknowledged state authorities were split over whether internal borders should be open.
“That is largely related to risk tolerance and whether one is prepared to allow any possibility of COVID-19 entering into one state,” Dr Coatsworth told the ABC.
“We need to have these ongoing border discussions, they’re obviously a live issue.”
Victoria recorded 35 new cases and seven more deaths on Monday as stage four restrictions began to ease across Melbourne.
NSW recorded four new cases, including three overseas travellers in hotel quarantine.
No new cases were recorded in Queensland.