Prime Minister Scott Morrison has warned the Victorian government's decision to extend it harsh lockdown will come at a cost to both the state and national economy, with further job loses expected.
But Premier Daniel Andrews defended the plan, saying the state had no choice but to proceed cautiously because the risk of setting off a potential third wave of infections and fatalities was too great.
"This will cause pain. It absolutely will. But it is the only option that we have," Mr Andrews said on Sunday.
In a joint statement with Treasurer Josh Frydenberg and Health Minister Greg Hunt, Mr Morrison said the Victorian government's proposed roadmap from its harsh restrictions would come at a further economic cost.
"The continued restrictions will have a further impact on the Victorian and national economy, in further job losses and loss of livelihoods, as well as impacting on mental health," they said.
Under state Labor's plan, metropolitan Melbourne will undergo another two weeks of hard lockdown, albeit with some small concessions, before the government begins looking for "trigger points" of reductions in daily average case numbers to make further easings.
The plan for Melbourne and regional Victoria sets a course toward so-called "COVID normal" - when no new cases have occurred for 28 days and there are no active cases - and which Mr Andrews agrees might not be until December.
"Until we contain this (virus) properly we cannot open up," Mr Andrews told reporters in Melbourne.
"If we did that, we wouldn't be opening up at all, we would simply begin a third wave, one that would do even more damage than this pandemic has already done."
Deputy federal Labor leader and Victorian MP Richard Marles said he understood it was a frustrating time for Victorians.
"The health advice that Premier Andrews outlined shows we can't run out of the strict restrictions or we'll be back in a strict lockdown by the end of the year," he told AAP.
But the Australian Industry Group has condemned the roadmap, saying it only prolongs the pain.
"Today's so-called Victorian roadmap to recovery is a document of despair for industry and their employees," Ai Group chief executive Innes Willox said.
"It is now clear that as a result of state government decisions, actions and failures, Victoria will be an economic basket case and a drag on the national economy for years."
Economists are concerned, given Victoria makes up 25 per cent of national output and its delayed return to normality is likely to continue to drag on the Australian economy, which is now in recession.
Business Council chief executive Jennifer Westacott said while there might be light at the end of the tunnel, more concessions should be made.
"The longer the road out of this, the harder it will be for the state and the nation to recover, get people back to work and create new jobs," she said.
Australia's national death toll is now 753 after Victoria recorded 63 new cases and five more deaths on Sunday, taking the number of state fatalities to 666.
Daily case numbers in the southern state have been tracking steadily down in recent weeks and are now frequently below 100.
NSW recorded 10 new coronavirus cases, including two year 7 students from a prestigious Sydney Catholic school.
Queensland has recorded two more infections while more than 200 hospital staff are in quarantine after being linked to the growing Brisbane Youth Detention Centre and Queensland Corrective Services cluster.
Australian Associated Press