Victorian Premier Daniel Andrews said the entire state would return to stage-four restrictions, wherein residents can only leave their house for only four reasons and cannot travel beyond a five-kilometres bubble, due to a growing outbreak of the highly-infectious UK COVID strain.

All non-essential retail will close as will schools. Facemasks must be worn outside the home.

Australian Industry Group's Tim Farrah said the toll of the government's "mismanagement keeps getting bigger and bigger", and businesses were frustrated.

"It's another nail in the coffin [for businesses]," he said.

"It just keeps adding up and people's capacity to be able to keep financing all the losses gets eroded away each time. More and more businesses are getting pushed to the wall."

Mr Andrews said there was no time to establish a ring of steel and if the rules were softer regionally, Melburians possibly with the virus, could travel outside the city.

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Business Wodonga's Graham Jenkin described the lockdown as "demoralising".

"I understand the fear of the new UK strain but it's frustrating that here in Wodonga we can look across the river to where restrictions don't apply," he said.

"It's just disappointing [to be affected by] a decision 300 kilometres away, but a couple of kilometres further north there's no restrictions."

Mr Jenkin said the closures would have a financial and mental toll on businesses especially hospitality services and florists leading into Valentine's Day.

"I feel so much for them, it's one of the best trading days of the year and now it's been taken away again, but [Friday night] 5000 people have bought tickets for the tennis, how many will still go?," he said.

On Friday, restrictions lessened in NSW. Mandatory mask use was scrapped in a number of settings and indoor venues reverted back to the two-square metre rule.

Premier Gladys Berejiklian said the border between NSW and Victoria will remain open and NSW Health was monitoring the situation closely.

"We wish the people of Victoria well during this difficult time," she said.