Childcare and kinder will stay open, but schools will close. A returned traveller was infected with the strain, which Mr Merlino said was spreading "faster than we have ever recorded".
From midnight tonight, five million residents of Melbourne and surrounding Victoria state will be banned from leaving their homes except to work, exercise or for essential needs after 26 cases of the Indian variant were detected in the city, with thousands more people told to isolate and get tested. "When we see a member become infected, nearly all the household is infected", he said.
"The reason why we are dealing with this outbreak today is because of a hotel breach in South Australia", he said.
Merlino said contact tracers have identified more than 10,000 primary and secondary contacts who would need to quarantine, test and self isolate, adding "that number will continue to grow and change". The lockdown for Melbourne and the rest of Victoria state comes after a new cluster in the city rose to 26 infections, including a person who was in intensive care. It is unclear how exactly the virus got from Case A to this man, but he went on to infect at least 14 others.
The additions bring the number of people in Victoria's latest cluster to 26.
The man, in his 60s, could be the possible "source case" of the Whittlesea outbreak, although a definitive link is yet to be established.
'If more people were vaccinated, we might be facing a very different set of circumstances than we are today.
If everything goes to plan, the lockdown will be lifted on Thursday, June 3, at 11.59pm.
Can I visit a hospital or aged care facility?
Australia has recorded about 30,000 Covid-19 cases to date - the vast majority in Victoria during last year's devastating second wave. And masks must be worn everywhere.
A spokesperson from the New Zealand Ministry of Health said this afternoon it was "crucial" everyone who has been in Victoria since May 11 was checking Victoria Health's website for locations of interest.
One helpful effect of the outbreak is that there has been an upsurge in Victorians getting vaccinated with 15, 858 people receiving their jab on Tuesday, whereas the previous average daily uptake was less than 6, 300.
In recent months, Australians had largely been enjoying few restrictions after the country successfully contained the spread of coronavirus, but critics say a glacial vaccine rollout has left the nation vulnerable to outbreaks from hotel quarantine facilities.
Prime Minister Scott Morrison batted away the criticisms, saying "no system is foolproof" and pointing to Australia's comparatively successful coronavirus response globally.
"From tomorrow morning, vaccinations at state sites will be expanded to include those in the 40 to 49-year-old age group, for the Pfizer vaccine", he said, before urging those eligible to book their jab.