Announcing the new rules to fight the state's second wave of the virus on Monday, Premier Daniel Andrews urged people not to panic buy.

"Supermarkets as well as grocery stores, the local fruit and veg, the local butcher, the baker, all of those shops, they will remain open," he said.

"There'll be more to go around if people buy what they need when they need it rather than going and buying four trolleys worth of groceries and enough chicken or beef to last you until Christmas. That's not necessary."

Non-essential retail, some manufacturing and administration must stop onsite operations as of midnight on Wednesday.

The premier says people will still be able to shop online or via click and collect services, while hardware stores will only remain open for tradespeople.

The new rules also limit the number of workers allowed on construction sites.

For small-scale construction, no more than five people will be allowed on-site at any one time, while the workforce on large-scale government projects has been cut by half.

Commercial building projects will only be allowed to have 25 per cent of staff on-site.

"We are moving them to a pilot light phase, not being turned off completely but they are dramatically reducing the number of people they have working for them and their output over the next six weeks," Mr Andrews said.

Meat processing and distribution centres, which have been the centre of coronavirus outbreaks in the state, will reduce production by about a third.

Workers will no longer be able to work across multiple sites and will be kitted out in personal protective equipment.

"Those workers will be essentially dressed as if they were a health worker - gloves and gowns, masks and shields. They will be working in one workplace only, they will be temperature checked, they will be tested," Mr Andrews said.

He said the industry played a critical role in feeding the whole of the nation.

All of the restrictions on businesses apply to metropolitan Melbourne only, except for abattoirs which will operate under stage four across the state.

About 250,000 people were expected to be impacted by the changes and it would have a "very significant impact" on the state's economy for years, Mr Andrews said.

He said the alternative was having up to 500 cases of COVID-19 a day, which would eventually overwhelm the hospital system and lead to more deaths.

"It is heartbreaking, it is very challenging, but these are tough calls that have to be made," he said.

It comes as the state recorded 429 new cases of coronavirus on Monday and 13 deaths, taking the state toll to 136 and the national figure to 221. It equals last Thursday as the state's worst day for fatalities.

Of the 13 deaths announced on Monday, eight were linked to outbreaks in aged care facilities.

The latest grim figures come as the state begins a six-week lockdown, which is expected to run until at least September 13.

Under the new restrictions, residents of metropolitan Melbourne must follow an 8pm-5am curfew and can't travel more than 5km from home for shopping or exercise.

Meanwhile, regional Victoria has moved to stage three restrictions, with restaurants, cafes, bars and gyms to shut from midnight on Wednesday.

Mitchell Shire, north of Melbourne, has been reclassified as a regional municipality, meaning it will remain under stage three rules.

Payments for Victorians who need to self-isolate for 14 days and have no sick leave will be made available by the federal government.

Prime Minister Scott Morrison said people can apply for the $1500 payment multiple times, and it's primarily aimed at people on short-term visas.

Australian Associated Press