Victoria confirmed 177 new coronavirus cases overnight, Premier Daniel Andrews announced on Monday.
One case is in hotel quarantine, 25 are connected to known outbreaks and 151 are under investigation.
It is the first time the number of new cases has dropped below 200 since Thursday.
Mr Andrews said all Victorians need to take COVID-19 seriously.
"The notion this is simply something that will be tragic if you're very ill already, and very old, that is simply not right," he told reporters.
"This can have catastrophic outcomes, tragic outcomes, for people who are otherwise healthy and people in any age group."
Mr Andrews said it's possible the lockdown could be extended beyond metropolitan Melbourne and Mitchell Shire.
"I can't rule out having further limits placed on people's movement," he said.
"If you don't want a stage four, if you don't want the lockdown to last a moment longer, then please follow the rules."
Chief Health Officer Brett Sutton said Monday's numbers were a "good sign" but would like to see a longer trend of decreasing case numbers.
An empty Melbourne during lockdown. Source: AAP
"It's great it's lower than our peak. But it may not be our peak yet," he said.
"So I would like to see a week of decreasing numbers before I come and say I have greater confidence about the direction we're going in."
Mr Sutton said the state was seeing "four or five new outbreaks every day".
An outbreak at Al-Taqwa College in Truganina is the state's largest cluster, now totalling 144 cases.
Clusters in aged care have also grown, with the Menarock Life aged care home in Essendon now totalling 26 cases, with both staff and residents infected.
An outbreak at Glendale Aged Care in Werribee is now at 13 cases, while Japara Central Park Aged Care in Windsor has had two positive cases.
Prof Sutton was also asked about , where dozens of asylum seekers are being detained.
Victoria’s Chief Health Officer Brett Sutton Source: AAP
"I'm aware one of the workers there has tested positive but had not been infectious while at work," he said.
"There's refugees held in that facility. They're a significantly vulnerable population. But my understanding is there's been a significant clean of that facility."
Spot checks and fines
It comes as 133 fines were issued in Victoria over the past 24 hours for breaching coronavirus lockdown rules.
Victoria Police conducted almost 2500 spot checks at homes, businesses and public places.
Thirteen people at an apartment in Docklands, 10 at an apartment at South Wharf and eight at an apartment in Southbank were fined for social gatherings.
Five people who travelled from metropolitan Melbourne to Myrniong, northwest of the city, to go camping were also fined.
About 9500 vehicles at checkpoints on main arterial roads were inspected and 22 fines handed out.
Residents of metropolitan Melbourne and Mitchell Shire are only allowed to leave their homes for four reasons: to shop for food and supplies, to receive or provide care, to exercise and study or work if they can't do so from home.
Police can issue on-the-spot fines of up to $1652 to individuals and $9913 to businesses for flouting the rules.
Additional reporting: AAP
Residents in metropolitan Melbourne are subject to stay-at-home orders and can only leave home for essential work, study, exercise or care responsibilities. People are also advised to wear masks in public.
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