Hopes that Australia may have escaped the worst ravages of the coronavirus pandemic were fast fading on Friday as a growing outbreak in its second-largest city has officials eyeing draconian measures to curtail the spread.

With hundreds of new infections emerging every day despite people in Melbourne entering a fourth week of lockdown, many on the streets told AFP they were saddened and anxious.

The virus has forced millions back indoors and behind masks weeks after the country thought the epidemic had been tamed.

"People are starting to feel depressed because you can't leave the house," Melbourne resident Stefan Paskoski said.

"All you do is go to work, come home if you're working -- if you're unemployed, you rely on government social security."

Victoria state Premier Daniel Andrews said the city of five million and surrounding areas would be stuck in "limbo" unless they could cut infection rates.

He announced more than 600 new cases on Friday and eight more deaths, nearly all in Melbourne.

As Melbourne passed the halfway point of a six week lockdown, the state premier warned it would be stuck in 'limbo' unless it could cut the infection rate
As Melbourne passed the halfway point of a six week lockdown, the state premier warned it would be stuck in 'limbo' unless it could cut the infection rate AFP / William WEST

"We've stopped it from getting completely out of control... but we haven't been able to suppress it sufficiently," Andrews told media.

Without a drop in infections, it was an "absolute certainty" that any rollback of restrictions would see cases spiral out of control, he said.

The resurgence of the virus has been largely blamed on security bungles at hotels used to quarantine international travellers that allowed COVID-19 to leak into the community.

But Andrews also blamed the continuing rise in cases on those flouting the rules -- including people with the virus leaving their homes instead of quarantining for 14 days. A quarter of those doorknocked by inspections staff on Thursday were absent.

"It's almost impossible for us to see businesses recover and survive unless and until we get these numbers down," he said.

Friday's 627 new cases in Victoria were a drop from Thursday when the state recorded the nation's highest daily toll to date with 13 deaths and 723 cases.

Police patrol Melbourne's Shrine of Remembrance to enforce rules requiring people wear masks
Police patrol Melbourne's Shrine of Remembrance to enforce rules requiring people wear masks AFP / William WEST

Many of the recent fatalities were connected to aged care homes in Melbourne where government disaster relief teams have been deployed to replace infected staff.

Earlier this week an ambulance was seen taking away the body of one deceased resident from Epping Gardens, a facility that has seen 117 cases.

Melbourne resident Colin Cowen told AFP he had taken his mother out of Epping Gardens days before the outbreak but was still struggling to communicate with staff about retrieving her possessions.

"When one of these things happens it's like a code of silence or something, I got no feedback from here at all," Cowen said.

Victoria state's top health official said any increase in restrictions would have "really significant consequences" but admitted tougher rules were now being considered, including a strict lockdown and widespread business closures that were successfully used in New Zealand.

New Zealand has not recorded a locally transmitted case from an unknown source in more than 90 days and only 22 deaths in a population of five million.

Australia's total cases ticked towards 17,000 on Friday, with 196 deaths in a population of 25 million.

The outbreak comes as Muslims around the country mark Eid al-Adha -- with Andrews admitting the religious holiday would look very different this year for Victorian worshippers.

In Sydney, restrictions on numbers allowed inside the Gallipoli mosque caused large queues on Friday morning, with all worshippers wearing masks as Australia's biggest city also battles growing clusters.

New South Wales state, home to Sydney, recorded 21 new cases on Friday.

Elsewhere in the country, other states and territories have for weeks reported zero or just handfuls of cases while relaxing restrictions but banning visitors from the virus hotspots of Victoria and Sydney.

Paskoski urged Victoria authorities to take action to end the lockdown.

"Like New Zealand, they've overcome the problem," he said. "Maybe we should go into a harsher lockdown and get this done and move on."

Coronavirus Australia