"We must assume that there are further cases in the community than we have positive results for", said state premier Daniel Andrews.
Mr. Andrews said the guiding principle of the restrictions was that if people could work from home, they should work from home.
"I am confident that this short, sharp circuit breaker will be effective".
However, Mr Andrews claimed anybody who gets the strain will become "gravely ill" - despite only one person with it being in intensive care in Victoria.
The problems at the Australian Open, the biggest worldwide sports event so far this year, underline the difficulties of holding the much more complex Tokyo Olympics, which are due to start in July after a year's delay.
"I don't have advice to cancel the event on the basis that it's unsafe", he added, saying the latest cases had nothing to do with the tennis quarantine program.
Melbourne's new outbreak stems from the Holiday Inn, a hotel quarantine centre for worldwide travellers.
The tournament started Monday with up to 30,000 socially-distanced fans attending in the biggest crowds seen in tennis since the pandemic but now will feature empty stands from Saturday until at least Wednesday.
Burmese Military Stage Coup, Detain Aung San Suu Kyi
The military on Monday detained the leaders of the governing N.L.D. party and Myanmar's civilian leadership, including Ms. Similar statements followed from Australia , India, Singapore, and United Nations Secretary General António Guterres.
The lockdown, which has shut restaurants and cafes for all but takeaway, hit just as Melbourne had geared up for the biggest weekend in almost a year, with Lunar New Year celebrations, Valentine's Day and Australian Open crowds.
A fresh Covid-19 cluster linked to a quarantine hotel in Melbourne, the capital of Victoria state, reached 13 cases as of Thursday midnight, as authorities rushed to quash the spread of the virus.
There have been zero cases acquired interstate and zero cases diagnosed in hotel quarantine with more than 20,000 people tested in 24 hours.
Andrews met with senior cabinet ministers and health officials overnight and had discussions with other federal and state government leaders. Here's a look at the major problems faced by the year's opening Grand Slam: Melbourne became the epicentre of the country's "second wave" after security bungles at quarantine hotels for worldwide returnees sparked a major outbreak last July, with new daily cases rising above 700 in August.
"This is the second lockdown caused by Victoria's hotel quarantine system, it must not be as long and destructive as the last", Business Council Chief Executive Jennifer Westacott said.
All states and territories, except New South Wales - which includes Sydney and is the nation's most populous state - closed their borders to Victoria on Friday citing the high risk of transmission. A nightly curfew was imposed for weeks. The stricter bio-secure measures, compared with last year's U.S. and French Opens held in cities stricken by the virus, led to some resenting the conditions.
Last week, play in all six tuneup tournaments was suspended for a day after the worker in one of the tournament's quarantine hotels tested positive. All the players underwent testing and were cleared of infection. All of those tests returned negative.