The "temporary COVID disaster payment" would be made available on a week-by-week basis.
Residents older than 17 years of age, with less than $10,000 in assets, are eligible. Those who usually work more than 20 hours a week can access the full $500, whereas those who work fewer hours, will receive $325.
Affected workers will be able to apply for the payment from next Tuesday.
This latest payment support is part of a new national framework initiative, and will also become available to other states if they are declared a Commonwealth hotspot, with a lockdown required for more than a week (like Victoria).
Scott Morrison said he had advised the acting Victorian Premier James Merlino about the new payment offer late yesterday.
To be eligible, a person must declare that they would have worked if a lockdown had not occurred, and would lose income because of it.
They also have to prove they have used up any pandemic sick leave or other leave entitlements if it was available to them from their empployer, and have less than $10,000 in "liquid assets".
Scott Morrison said those already receiving other kinds of support payments from the Commonwealth, like JobSeeker, will not be able to access the payment.
"We are talking about somebody getting through the next week," said the Prime Minister
"Someone who would normally be in an economic situation where every dollar counts”.
"They will be able to apply from Tuesday in making an application online with Services Australia and there will also be a number they can contact and there will be further information provided about that."
As to how the payment will be funded will be on the table for discussion at Friday’s National Cabinet meeting, with two options available.
"What I put to the acting Victorian Premier last night was that we should split 50-50 both payments. Go 50-50 on household and 50-50 on business,” said the Prime Minister.
"Alternatively, the states can agree that in these circumstances they will always provide the business support and we will always provide the household support.”
"Either way, we will work it out at National Cabinet tomorrow, we will have a good discussion about it”.
"What matters is that businesses get the support they need and households get the support they need, and the politicians don't need to have a discussion in public about how that is going to get done."
Treasurer Josh Frydenberg is currently working through the maths, but at this stage has no estimate of how much the payment will cost the government. It depends on the uptake.
"For every 100,000 people that will be $50 million per week," he said.
The government had earlier advised it was considering what support options were available for the state, but had ruled out another JobKeeper type wage subsidy scheme.