Victorians will not be allowed outside their homes after 8pm for any reason as a state of disaster is declared.
Premier Daniel Andrews brought in the escalated emergency level as the state's worsening crisis shows no signs ending.
Only 73 of the 671 new cases are linked to known and contained outbreaks or complex cases, with 598 under investigation.
Mr Andrews confirmed Melbourne will to go into strict Stage 4 lockdown from Wednesday after a week of speculation.
Only one person in a household can go shopping per day and exercise is limited to one hour a day - both must be within 5km from home.
All recreational activity is banned and no more than two people can be together outside, even if they are from the same family or household.
Premier Daniel Andrews (pictured, arriving at a press conference on Saturday) is expected to send Victoria into a strict stage four lockdown on Wednesday
Victoria recorded 671 new COVID-19 cases on Sunday (pictured). A Stage 4 lockdown will see nearly all shops close and high school students back to learning from home
'All of those changes are about limiting the number of people we come into contact with,' Mr Andrews said.
'Daily exercise is just that. It's an opportunity to get some exercise. It's not an opportunity to live our lives as if this pandemic was not real and not here.'
The new restrictions are in some ways even harsher than the lockdown imposed by New Zealand.
The looming harsher lockdown prompted thousands to flock to shops across Melbourne in a new round of panic buying.
Long lines and full trolleys were seen outside supermarkets as early as 7am - even though they would stay open under stage 4.
Under the new rules nearly all cafes, restaurants and shops are likely to close for a further six weeks.
Only supermarkets, pharmacies and service stations will be allowed to stay open across Melbourne and key regional areas of Victoria.
The looming harsher lockdown prompted thousands to flock to shops across Melbourne in a new round of panic buying
Long lines and full trolleys were seen outside supermarkets as early as 7am
The panic was unnecessary as supermarkets would stay open under stage 4
Residents will likely be restricted to their own suburbs and further limits will be imposed on the numbers allowed in supermarkets.
Cafes and restaurants are likely to continue to provide takeaway services, but people will not be allowed to dine in.
Police will also step up their checks and increase patrols to stop potential breaches.
Licence-plate recognition technology will be used to identify non-essential travellers, the Herald Sun reported.
It is expected construction sites will remain open and tradies will be given special access to hardware stores.
Public transport will also be continue in a limited capacity, with masks compulsory, and outdoor exercise will be allowed.
The decision to move to Stage 4 restrictions and its announcement rests on the Victorian Government and Premier Daniel Andrews.
Meet was one of the items people were trying to stock up on - likely freezing it for the weeks of lockdown to come
A line outside Aldi in Melbourne - which will stay open even under strictest lockdown
Victoria recorded 397 new coronavirus cases and three more deaths on Saturday.
Mr Andrews announced the latest figures with 37 linked to outbreaks and 360 currently under investigation.
Australia's COVID-19 death toll rose to 201 after Victoria on Saturday reported the deaths of a man and two women aged in their 80s and 90s.
The fatalities bring Victoria's death toll to 116. There are currently 5,919 active coronavirus cases in Victoria.
At least 1,008 active cases have been connected to outbreaks in aged care homes.
More than 100 cases have been referred to Victoria Police for breaching stay-at-home lockdown rules.
Experts have been working over the weekend to analyse infection data from the first half of Victoria's six-week lockdown and determine if harsher measures are necessary.
Melbourne locals pictured wearing face masks during a walk along Morell Bridge on July 24
Victoria is expected to extend the lockdown for an additional six weeks (pictured, a clinical waste removal personnel at St Basil's Homes for the Aged in Fawkner, Melbourne)
All non-essential businesses were forced to close and only supermarkets, corner stores, foodbanks and pharmacies were open
Restaurants, cafes, butchers and fruit shops were all closed
Takeaway food was not allowed
New Zealanders were only allowed to leave home for an essential reason like food shopping or exercise
Interaction was only allowed with people in one's own household
All schooling was done remotely
Mr Andrews admitted further restrictions, based on state and national modelling, could prove a 'circuit breaker' for rising COVID-19 cases.
'What we have at the moment are numbers that are too high of community transmission and that is a concern to us.
'It is not a tap you can just turn on or off.'
He admitted further restrictions could have a devastating impact on the economy.sonos sonos One (Gen 2) - Voice Controlled Smart Speaker with Amazon Alexa Built-in - Black read