Victoria State Premier Daniel Andrews said the restrictions would be in place until 28 September, with a slight relaxation.
A gradual easing of the measures will be implemented from October.
The state has been the epicentre of the country's second wave, accounting for 90% of Australia's 753 deaths.
Australia has recorded a total of 26,000 cases in a population of 25 million.
The greater Melbourne area entered a second lockdown on 9 July after a rise in cases. A 5km (3 mile) travel limit and night time curfew was imposed while shops and businesses were closed.