A backpacker hostel in Byron Bay on the NSW north coast has been placed into a snap seven-day lockdown after a positive COVID case and 84 close contacts were identified.

Ballina MP Tamara Smith said police were monitoring the Aquarius Backpackers in Byron Bay to ensure no guest leaves the facility.

Police confirmed they were "assisting NSW Health at a hostel on Lawson Street in Byron Bay" and have referred any further inquiries to NSW Health.

The ABC has contacted NSW Health but officials there have yet to provide any further information about the operation underway at the backpackers.

News of the positive case came as thousands of school students descended on the north coast for the traditional schoolies celebrations.

Ms Smith says food and health support is being provided to the dozens of guests who are now in lockdown at the backpackers.

Ms Smith posted at statement about the situation to her verified Facebook page on Wednesday night.

"I'm closely monitoring a situation in Byron Bay where a positive COVID-19 case and 84 close contacts have been identified at Aquarius Backpackers in Byron Bay," her statement read.

"Police are monitoring compliance 24/7 over the next seven days.

"My thoughts are with everyone in that situation as it will be a tough time and I will keep checking to make sure that people are getting the support they need."

Ms Smith told the ABC that everyone staying in the backpackers is presumably fully vaccinated, though she remains concerned for the welfare of guests.

Ms Smith said any further spread of the infection would be "pretty catastrophic" for the region.  The Byron Shire has one of the lowest vaccination rates in NSW and businesses are still recovering from two lockdowns in August and September this year.

"It's schoolies at the moment and we have 16 flights a day coming into the Byron Ballina gateway airport. Everyone has been flocking to our region," she said.

"We want to make sure that the situation is contained and that people are safe and getting the support they need.

"The real concern is the contacts of 85 people and how many people they've seen.

"If that starts to spread out, then that's very concerning for our little community if we go into a bigger lockdown because everyone's starting to get back on their feet."

The night manager at Aquarius Backpackers declined to give any information.

"No comment," he said, adding that he was not authorised by the owners to speak.

The hostel has dormitory accommodation as well as private rooms.

Guest facilities include a swimming pool, a restaurant and cafe and an outdoor bar.

The hostel is on a busy street in Byron Bay, a short walk from Main Beach.