The current lockdown was meant to end 11.59 on Thursday, but has now been extended to 10 June.
It comes amid growing concerns over the ‘super strain’ that is spreading across the state, with the list of exposures sites growing to more than 350.
Regional areas will have different restrictions to Melbourne.
Melburnians will only be able to leave home for five reasons, including authorised work, caregiving, compassionate and medical reasons, essential shopping and exercise, and for vaccination purposes. They will, however, have an expanded 10 km radius, up from the 5 km currently in place, while students in years 11 and 12 will return to face-to-face learning on Friday.
All hospitality venues in the state capital will have to keep their doors locked for another 7 days, but will be permitted to provide takeaway, while non-essential retail will only be open for click and collect. Gyms, hairdressers, community facilities and entertainment venues, are also expected to remain closed at least for another week.
Shops like supermarkets, food stores, bottle shops, banks, petrol stations and pharmacies will however continue to operate as usual.
From 11.59 pm on Thursday, restriction will ease in regional Victoria, with Victorians able to leave home for reasons other than the 5 in place in Melbourne.
Food and hospitality will also open for seated visits only, with a cap of 50 patrons. Retail and beauty services will also resume services where masks can be worn.
"Businesses that are open in regional Victoria but closed in Melbourne, so restaurants and beauty, for example, must check the IDs of everyone they serve," Mr Merlino said.
Regional Victorians will also be permitted to travel to Melbourne but only for "a permitted reason".
Outdoor gatherings will no longer be limited to two people, but a cap of 10 will be in place from Friday.
More funding support has been committed to businesses, with a $209 million dollar assistance package from the Victorian government.
That's on top of the $250 million announced on the weekend.
Businesses will only need to apply once, with applications open from tomorrow.
The Acting Victorian Premier James Merlino has also renewed his request to the Commonwealth for more JobKeeper support.
“A lot of Victorian businesses are doing it tough right now, and it is our expectation that the Federal government will give them the support they deserve,” said Mr Merlino.
Treasurer Tim Pallas said:
"We are standing with Victorian businesses and workers – providing them with the support they need to get through this challenging time.”
Minister for Industry Support and Recovery Martin Pakula said:
“Industry and business have been magnificent contributors to our efforts to combat this virus and they continue to play a leading role.”
Minister for Small Business Jaala Pulford said:
“We know businesses that are currently closed will be counting the days until they can re-open. The efforts of our small business community have been heroic, and we are proud to support them.”
More details to come…