Official data on Thursday showed there were 292 new infections in the past 24 hours, down from 428 on Wednesday.
It is the lowest daily total since 20 July. Victoria had by far the most infections - 278. Its capital Melbourne began its shutdown on 3 August.
Health Minister Greg Hunt voiced cautious optimism about the new data.
"We now believe, cautiously, that we have early signs of the flattening of the curve," he said.
In Melbourne, workers must carry a permit to leave home, and all non-essential businesses have been shut. Mask-wearing in public is also compulsory.
For more than a month the city's residents - nearly five million people - have been required to stay at home except for essential shopping trips, medical care or exercise.