Shops were shut and streets were deserted in the city of about 5 million people, the capital of Victoria state, which reported 471 new COVID-19 cases and eight deaths in the past 24 hours.

Australia has now recorded about 20,000 COVID-19 cases and 255 fatalities, still far fewer than many other developed nations.

But the Victorian outbreak threatens to spill into other states. New South Wales reported 12 new coronavirus cases on Wednesday, taking the national tally to 483. There were no cases reported in other states and territories

"We've flattened that curve once, we'll flatten that curve again," Health Minister Greg Hunt told reporters.

Victorian Premier Daniel Andrews urged Melbourne residents, who have already endured weeks of less severe lockdown, to stay calm amid a surge in demand at supermarkets.

"There's no need for people to be trying to stockpile months and months of food," Andrews told reporters in Melbourne.

Abattoirs are one of the few businesses allowed to stay open in Melbourne, though with a reduced workforce, under the "stage four" lockdown which took effect at midnight on Wednesday.

"We have tried to get that balance between reducing the amount of movement, therefore reducing the number of cases, but not compromising what you need being on the supermarket shelves," Andrews added.

Forecast national peak unemployment was revised upwards to about 10% due to Victoria's reimposition of restrictions, Prime Minister Scott Morrison said. Counting those workers on Australia’s wage subsidy scheme, Morrison said effective unemployment would be closer to 14%.

"These measures will have a very significant cost, and it will impact the recovery path," Morrison told reporters in Canberra.

Australia had previously forecast unemployment would hit a high of 9.25% this year, as the economy endures its first recession in three decades.

After closing its international borders early, locking down cities and launching a campaign of mass virus testing, Australia had reopened in June with daily cases in the single figures.

But hidden transmissions among staff at quarantine centers led to wider community transmissions in Victoria, which has recorded triple-digit new cases for weeks.

Victoria now has the bulk of Australia's infections, with more than 13,000 reported cases. It reported a daily high of 725 new cases and 15 deaths on Wednesday.