Sydney has been blanketed in a thick haze of fog, causing transport headaches across the city on Boxing Day.

The cloud of fog set in early this morning and has delayed all Sydney ferry services.

It comes just hours before the annual Sydney to Hobart yacht race kicks off.

Heavy fog blankets Sydney causing transport delays hours before yacht race. (Nine)

About 6.30am, Sydney Ferries announced that the 6.40am Circular Quay to Manly and the 7.10am Manly to Circular Quay ferries were cancelled due to fog.

Half an hour later, it confirmed all services would not be running and there was no forecast for when services would resume.

Passengers are advised to delay their trips or use alternative transport.

Sydney is set to reach a top of 29C today, with the fog expected to clear in the coming hours.

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