A Sasa Ognenovski header and an Alessandro Del Piero penalty were enough to move Sydney up into fourth place, with just five regular-season games to go.
Newcastle edged their New South Wales rivals in a tense first half at Hunter Stadium but could not convert their chances as they went to the half-time break locked at 0-0.
Sydney snatched the lead against the run of play as Ognenovski muscled his way into the area to head home a Del Piero corner on the hour mark, before the Sydney skipper sealed the win from the spot in the 73rd minute.
The win lifts Sydney above the Central Coast Mariners and the Wellington Phoenix in a congested table while Newcastle are four points out of the top six and in danger of losing touch for a finals berth.
Western Sydney cruised to an easy 2-0 win over Perth Glory at the Perth Oval despite missing a trio of key players.
The Wanderers went into the match without the ill Shinji Ono, injured Ante Covic and suspended Jerome Polenz, but had little trouble dispatching a lifeless Perth side playing to keep their season alive.
It took the visitors just 12 minutes to grab the lead through Mateo Poljak, who shuffled around Glory defender Michael Thwaite and blasted the ball into the bottom-right corner.
Substitute Tomi Juric put the result beyond doubt in the 71st minute when he pounced on a blunder from Glory marquee defender William Gallas.
Elsewhere Melbourne Victory overcame Adelaide United 4-3 in a pulsating tie at Aami Park.
In a clash between two fierce traditional rivals, the away side took the lead twice through Cirio, but gave it up on each occasion to an inspired Guilherme Finkler.
Victory opened up a two-goal lead through strikes from Archie Thompson and Kosta Barbarouses, before Cirio netted his hat-trick with seven minutes to go, making it a nervy finish for the home side.
But the hosts managed to hold out, the win seeing them climb above Adelaide and Sydney and into third on the table, reviving their hopes of top-two finish.
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