A new nightly curfew for Melbourne, from 8pm to 5am, will come into effect on Sunday night as part of the state’s harshest movement restrictions to date.
Victoria's premier, Daniel Andrews, said that the state of disaster proclamation gave police greater power to enforce the new restrictions.
Since Saturday, 671 new coronavirus cases have been announced, and seven deaths.
The weekend surge follows a steadily increasing toll in both deaths and infections over the past six weeks in the state.
“If we don’t make these changes, we’re not going to get through this,” Mr Andrews said.
“We need to do more. That is what these decisions are about.”
He said there would be more announcements about workplaces on Monday, including the closure of certain industries.
“I want to ensure all Victorians – supermarkets, the butcher, the baker, food, beverage, groceries, those types of settings – there will be no impact there,” he said.
Melbourne residents will only be allowed to shop and exercise within 5km (3.1 miles) of their homes. All students across the state will return to home-based learning and childcare centres will be closed.
Restrictions on movement and business operations elsewhere in the state will be less severe than in Melbourne.
Neighbouring New South Wales, the country’s most populous state, reported 12 infections on Sunday, with the state now “strongly” recommending the use of masks in public.
Australia has fared far better than many other countries in keeping the coronavirus from spreading, but at a high economic cost.
It has recorded about 18,000 coronavirus cases and a national death toll of 208 following the deaths in Victoria, but the recent surge has proven difficult to contain.
Additional reporting by agencies