Sweeping new restrictions and a level 4 lockdown will be imposed across Melbourne from tonight to try and stop the rapid spread of Covid-19, while regional Victoria will return to stage three restrictions from Thursday.
Premier Daniel Andrews said 671 new coronavirus cases had been detected since yesterday and seven more people had died.
Six of the deaths have a connection to aged care.
Andrews said there was an "unacceptably high" number of community transmission cases, and the state had 760 active "mystery" Covid-19 infections where the source of the transmission was not known.
"Those mysteries, that community transmission, is in many respects our biggest challenge and the reason why we need to move to a different set of rules," he said.
From 6pm tonight, a state of disaster will be declared across Victoria, which will act in addition to the state of emergency.
Andrews said the state of disaster gave police greater power and allowed authorities to suspend acts of Parliament.
An evening curfew will be implemented across Melbourne from 8pm to 5am every day, starting tonight, forbidding anyone from leaving the home except for working, receiving or giving care.
Melbourne residents will only be allowed to shop and exercise within 5km of their homes.
While supermarkets will remain open, only one person from each household will be able to shop at a time.
Exercise outside of the home will only be allowed for one hour at a time and recreational activities like golf and fishing will be banned.
Restaurants and cafes may continue to offer takeaway and home delivery, and bottle shops will remain open.
Overnight train services will be restricted.
Couples are allowed to visit each other if they live outside a 5km radius.
Weddings are banned except on compassionate grounds