But when the prime minister emerged from the national cabinet meeting at 9pm last night he insisted that schools would remain open, and that those that were closing early for the school holidays would open again in term two, subject to medical advice.
But bars, restaurants and cafes will likely be forced to close in the coming days.
Meanwhile, NSW Premier Gladys Berejiklian said she would "update NSW tomorrow morning about the impacts and our plans following the National Cabinet".
Home delivery services will remain open, alongside supermarkets, petrol stations, pharmacies, convenience stores, freight and logistics.
There are now 669 confirmed cases of coronavirus in NSW, with 136 new infections announced this morning.
"I will inform National Cabinet tonight that Victoria will proceed over the next 48 hours to implement a shutdown of all non-essential activity across our state to combat the spread of Coronavirus", he said.
Freight, logisitics and home delivery will also be allowed to continue.
Death toll from coronavirus in Italy tops that of mainland China
The daily number of new confirmed cases in Italy continues to rise, with almost 6,000 new cases reported on Friday. The government on Friday therefore tightened curfews, which have been in force nationwide since March 10.
Victoria has recorded 296 cases of COVID-19, after 67 new cases were confirmed on Sunday.
The announcement comes after Prime Minister Scott Morrison condemned thousands of people who flouted the social distancing measures and flocked to Bondi Beach to soak up the sun this weekend.
"The more Australians themselves assist us in this fight against the virus to protect lives and livelihoods, the more and better able we are to ensure that Australia comes out stronger on the other side".
All the same essential services including banks will all remain open, he said, while schools will shut across the state from Tuesday. Backpackers from overseas had been diagnosed, just hours after Bondi Beach was closed after being packed on Friday.
"What happened at Bondi Beach yesterday was not OK and served as a message to federal and state leaders that too many Australians are not taking these issues seriously enough", he told reporters on Sunday.
Mark McGowan, Western Australia's premier, said Sunday his government plans to acquire hotels to isolate people, and may turn Rottnest Island, a tourism hotspot 19km off the coast from Perth, into a quarantine zone.
Outdoor gatherings are capped at 500 people, and indoor gatherings above 100 people are banned.