The NSW Waratahs are remaining upbeat despite losing touch with the Super Rugby Pacific frontrunners after falling 12-10 to their bogey side the Blues in an ugly encounter in Sydney.

The Auckland-based Blues extended their longest-ever winning streak over any team in the competition to 10 matches to consign the Waratahs to a one-from-four start this campaign.

It could have been so different.

After enduring a heartbreaking 23-21 loss to the Highlanders at home last week, the Waratahs' frustrations continued in a clumsy showing at Allianz Stadium on Saturday night.

The bumbling Blues were there for the taking but the Waratahs will rue not capitalising on a series of attacking chances, mostly in the opening quarter.

"It's a missed opportunity to get a win against a strong team like Auckland," said Waratahs coach Darren Coleman.

"But I'm quite philosophical that if we keep that intensity and we just sharpen up a couple of aspects that we can compete with those teams and we can be there at the right end of the season."

In the end, though, the Waratahs were fortunate not to lose by more after Blues goalkicker Stephen Perofeta missed three sitters as well as another diabolical conversion attempt from out wide.

There was excitement early when Dylan Pietsch appeared to have scored, only for replays to pick up flanker Charlie Gamble stepping in to touch before delivering the last pass to the winger.

The Blues were also denied a try by the TMO for an obstruction at the maul, leaving the Waratahs clinging to a 3-0 lead in the shadows of halftime courtesy of a Tane Edmed penalty in the 22nd minute.

Alas, the hosts submitted after skipper Jake Gordon unfortunately put his foot in touch while attempting a clearing kick.

The weight of possession eventually told as prop Ofa Tu'ungafasi barged over to give the Blues a 7-3 lead at the break.

The Waratahs miraculously avoided falling further behind during a tense 10-minute period defending their line straight after the interval.

First the Blues were denied a second try with another obstruction ruling before Perofeta inexplicably kicked the ball dead from a regulation penalty touch finder.

But the equally-wasteful Blues finally widened the margin to beyond a converted try with their second five-pointer, this time to fullback Zarn Sullivan.

A try from a rolling maul to replacement hooker Jay Fonokalafi gave the Waratahs a late sniff but they had to settle for a bonus point instead on another night of what might have been for Coleman's side.

"The biggest difference between this time now and this time last year is we're playing better footy," Coleman said.

"Our record was pretty similar after four rounds, but we're playing better footy and we were getting pumped by those teams last year.

"This time we can walk away going 'geez, one or two things and we win that game."