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Health Minister Martin Foley said 371 people are in hospital in Victoria, 81 in ICU and 55 on a ventilator.
He said the situation in the Latrobe City council area deteriorated rapidly, resulting in their lockdown.
"We really had little to no choice through the public health advice to act and to act quickly," he said.
PREVIOUSLY:
Victoria has recorded 950 new cases of COVID-19 - a new record for the pandemic.
Seven people with COVID died in the 24 hours to midnight.
61,322 tests were received in the 24 hours to midnight yesterday and 34,028 vaccines administered.
IN OTHER NEWS:
On Tuesday, the Victorian government has agreed the border restrictions with NSW are becoming less relevant as the states' case numbers align.
On Tuesday Victoria recorded 867 cases while NSW reported 863 new transmissions.
"As the risk profile changes, that's a pretty accurate statement, I think," he said.
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