According to the Victoria state government the lockdown changes will allow 6,200 retail stores, 5,800 cafés and restaurants, 1,000 beauty salons and 800 pubs to reopen, impacting 180,000 jobs.
A further 41 fatalities were added to the state's death toll, mostly in aged care facilities that have been devastated by the outbreak.
The state of Victoria reported 322 new infections and 19 new deaths on Monday, with 14 of the deaths connected to outbreaks at aged-care facilities.
Many of the stylish boutiques and eateries in a city dubbed Australia's Hipster Capital that prides itself on superior coffee had already closed their doors ahead of a ban on non-essential businesses.
Queensland Health Minister Steven Miles said people were willing to pay for their own 14-day hotel quarantine to be allowed to escape Melbourne and other parts of Victoria that began
The state government will also ask Australian PM Scott Morrison to divert international flights to Melbourne over the next two weeks.