The lockdown for Melbourne and the rest of Victoria state comes after a new cluster in the city rose to 26 infections, including a person who was in intensive care.
For the next seven days Victorians will only be able to leave home for five reasons - shopping for necessary goods and services, authorised work or permitted education, exercise for a maximum of two hours per day, care-giving and medical reasons, and to get a COVID-19 vaccination.
Supermarkets, food stores, petrol stations, banks, bottle shops and pharmacies are considered essential, while other retail stores can provide click and collect.
Professional sports events such as the weekend's AFL games in Melbourne will continue, but without crowds.
The latest outbreak has intensified criticism of flawed quarantine facilities and a national vaccine rollout that, according to acting state Premier James Merlino, is "not where it should be".
"In the last day, we've seen more evidence that we're dealing with a highly infectious strain of the virus, a variant of concern which is running faster than we have ever recorded", he said. It is the fourth time Melbourne has been placed in a lockdown. All of them have been linked to a breach in hotel quarantine from South Australia.
Merlino said the variant was very contagious and there were more than 10,000 primary or secondary contacts of cases in the cluster.
Chief Health Officer Brett Sutton defended Victoria's contact tracing efforts as the outbreak spreads, saying it is an "absurd proposition" that the system is not working properly.
Some local residents rushed to get jabbed Thursday, as the state opened up mass vaccination hubs to people aged 40-49 for the first time.
"Only way to get through this is for everyone getting vaccinated as soon as they are elligible".
Australia has recorded about 30,000 cases and fewer than 1,000 deaths from Covid-19 - the vast majority in Victoria during last year's devastating second wave.
The federal government declared Melbourne a hot spot, which entitles the city to additional federal resources.
The man, in his 60s, could be the possible "source case" of the Whittlesea outbreak, although a definitive link is yet to be established. Those in Greater Melbourne must wear a face mask indoors. No visitors are allowed at homes other than an intimate partner, and public gatherings are also off the cards.
"We are considering whether further restrictions should be put in place".
Victoria last entered a five-day "circuit breaker" lockdown in February, when the virus escaped hotel quarantine and infected 13 people.
That lengthy lockdown had subjected Victorians to a "living hell", Liberal Democrats MP David Limbrick State told Victoria's Parliament in September 2020.
Permitted travel must only occur within a five-kilometre radius of a person's place of residence and shopping will be limited to one person per household, per day.