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Those breaching rules risk being fined £6,000 or even jailed.
It's the first time in a century that the busy border between Victoria and New South Wales has shut.
Regional Victoria was lucky to escape the stage 3 restrictions From midnight on Wednesday, everyone in Melbourne will be required to stay home unless travelling to work, studying, shopping for food or attending medical appointments.
Restaurants, cafes and bars will be able to provide takeaway service only, gyms and hair salons are closed, household gatherings are limited to two people and the current school holiday is extended.
Victoria Premier Daniel Andrews said the restrictions were onerous but necessary.
He said: "These are unsustainably high numbers of new cases.
“I would, with the greatest of respect, put it to you getting this virus and dying from it is very onerous too.”
The wider lockdown comes after Andrews had over the weekend reinstated strict social-distancing orders in more than 30 Melbourne suburbs and put nine public housing towers into complete lockdown because of the recent surge in cases.
Stage three restrictions now cover metropolitan Melbourne and the Mitchell Shire, which takes in towns including Broadford, Kilmore, Seymour, Tallarook, Pyalong and Wallan, north of the state’s capital.
Cops at Sydney Airport before heading to protect the NSW border Credit: EPA Workers in personal protective equipment in Victoria's capital, Melbourne Credit: Getty Images - Getty Not everyone is thrilled about the stage 3 restrictions in Melbourne Credit: Getty Images - Getty Andrews said: "I also understand six weeks might feel like an eternity.
"But it’s the time our health experts tell us they need to really get on top of this thing."
The Victoria Government said: "This decision was made in response to a significant increase in community transmission of coronavirus in these areas.
"Restrictions will be in place until 11.59 on Wednesday August 19, 2020.
"If you live outside metropolitan Melbourne and Mitchell Shire, there are only three reasons to enter: shopping for food and supplies, medical care and caregiving, and study or work – if you can’t do it from home.
"That means you cannot travel in or out of these areas for exercise or recreation.
"All Year 11 and Year 12 students in these areas will go back to school for Term 3 as planned from July 13, along with students at special schools."
Residents in regional Victoria have escaped the reimposed lockdown.
The premier said the measures would ensure the lockdown did not need to be extended to include the whole state.
Andrews said: "Regional Victoria has very, very few cases and vast parts of regional Victoria have no cases.
"This is designed to keep it that way."
9 News' graphic shows how cases are soaring in Victoria New South Wales-Victoria border to close after Victoria recorded its highest daily increase in Covid-19 cases Credit: EPA Passengers arrive on a Qantas flight from Melbourne to Sydney Airport Credit: Getty Images - Getty Widespread testing is underway in Victoria Credit: Reuters Extra cops have been brought in to make sure people follow the new rules Credit: Reuters