Prime Minister Scott Morrison has backed the Victoria-NSW border closure despite growing concerns from within the coalition over its potential economic damage.
Victorian Premier Daniel Andrews on Monday announced the closure from midnight on Tuesday after the state's coronavirus crisis escalated with a record 127 new cases overnight.
Mr Andrews said the decision had been made during a phone hook-up with Mr Morrison and NSW Premier Gladys Berejiklian.
A permit system will operate for people needing to cross between border towns like Albury and Wodonga to work or receive health care.
Mr Morrison said it was hard to say when borders would reopen.
"I hope it's not for too long because it obviously has an economic impact and people's jobs are at risk," he told 2GB radio on Monday.
"But they're equally at risk if the outbreak goes further than it is now."
The prime minister said closing the border was a regrettable but necessary step.
Treasurer Josh Frydenberg - the most senior Victorian in the federal government - said he wouldn't second guess the state premiers' decision.
"There's no doubt in my mind that closed borders do cost jobs, but we are facing a significant spike in cases from Victoria," he told reporters in Canberra.
He said Australia's economic recovery would depend on containing the disease.
"This is not State of Origin," he said.
Federal cabinet minister Sussan Ley backflipped on her criticism of closing the border, hours after saying it would devastate the regional economy.
Despite permits allowing locals to move across the border for work and health services, as well as for cases of hardship, local federal MPs are anxious.
Wodonga-based Nationals senator Bridget McKenzie said the decision could be devastating for regional areas.
"There's a lot of confusion and there's a lot of anger," she told Sky News.
Nationals senator Perin Davey - who is based in the NSW town of Deniliquin, close to Victoria - said the border closure would hit her community hard.
"Albury-Wodonga shares a health service. You've got all of these border towns, Echuca-Moama, Barooga and Cobram, they all share an economy," she told Sky.
Victoria's 127 new cases took its tally of active cases to 650, a jump of 590 in a month.
The deaths of two men in their 60s and 90s took the national toll to 106.
NSW recorded 10 new cases, while Western Australia has three new cases - all among people in hotel quarantine.
WA Premier Mark McGowan urged the federal government to withdraw support for a High Court challenge on his state's border closure.
"The legal challenge, and especially the commonwealth involvement in it, has now become completely ridiculous," he told reporters in Perth.
"This nonsense has to stop and it has to stop now."
The WA government is also asking for a cap on international arrivals with the state's hotel quarantine system under pressure.
NSW Premier Gladys Berejiklian was forced into retreat after being a vocal critic of Queensland's border closures throughout the pandemic.
"When we made those statements, or I made those statements, the vast majority of cases NSW and other states were experiencing were from overseas travellers or direct contacts," she said.
"What is happening in Victoria now is very different."
SA Premier Steven Marshall said his government's decision to move slowly on reopening the Victorian border had been vindicated.
He said a decision on opening his state to travellers from NSW and the ACT would be made separately.
Australian Associated Press