Victoria has recorded 273 new cases of COVID-19 and an additional virus-related death, state Premier Daniel Andrews announced on Monday.
It follows the state reporting 580 new cases over the weekend.
Monday's spike brings Victoria's total number of cases to 5942. There are 147 people in the hospital and 31 in intensive care.
The deceased was a woman in her 80s, Andrews told a news briefing on Monday. It brings the state's death toll to 39.
Andrews said 26,588 tests were completed in the past 24 hours.
Melbourne and surrounding Mitchell Shire is entering its third week of a six-week lockdown. People are only allowed to leave the house for work, school and essentials throughout this period.
"We've all got to make the best of these very challenging circumstances," Andrews told reporters. "We can't afford to ignore the absolute truth of what we face and that is that this virus is not yet contained.
"We need to drive these numbers down - we can't wish it away."
Meanwhile neighbouring New South Wales (NSW) recorded 20 new cases overnight due to increasing clusters linked to a pub and restaurant.
Eight cases have been linked to a club in the south coast town of Batemans Bay, the state's health department said in a statement, while cases have also been connected to a pub and restaurant in the Sydney suburb of Paddington.
Those who attended the venues have been ordered into isolation and testing is underway.
NSW Premier Gladys Berijiklian said all 20 of the state's new cases were from known sources.
"Whilst I remain incredibly concerned, that is one positive take out," she told reporters.
She said people are taking advice around isolation and social distancing.
"We need them to continue to do that."
