Acting Premier James Merlino confirmed Melbourne's extended "circuit breaker" lockdown would be repealed at 11.59pm on Thursday, ending stay-at-home orders.
In its place is a raft of eased restrictions including a 25-kilometre travel limit from home to keep Melbourne residents out of the regions over the Queen's Birthday long weekend.
"That means the only reasons to go further than 25km will be for work, education, caregiving or getting a vaccination," Mr Merlino told reporters on Wednesday.
"Travel into regional Victoria still remains a no-go for now."
Under the changes for Melbourne, students can return to schools, food and hospitality venues can reopen for seated service only, and outdoor gatherings can resume for up to 10 people.
A ban on home gatherings remains and masks are still compulsory indoors and outdoors when social distancing is not possible.
People in regional Victoria can welcome guests into their homes as part of eased restrictions from Friday.
Victoria reported one new COVID-19 case on Wednesday. It is linked to an existing outbreak and the person has been quarantining during their infectious period.
It comes as authorities investigate a link between an outbreak of the more infectious Delta strain and a hotel quarantine case, a man in his 40s, who returned from Sri Lanka on May 8.
Genomic sequencing shows his infection is identical to one of two families linked to the North Melbourne Primary School, which has emerged as the epicentre of the West Melbourne outbreak.
How the virus spread between the two groups remains a mystery, with no obvious breach of infection prevention control protocols.
Deputy Chief Health Officer Allen Cheng said there were four main theories, including that the man transmitted the virus to a staff member while in transit or to a fellow guest inside one of the hotels.
It may have then entered the community.
Emma Cassar, the head of COVID-19 Quarantine Victoria, said the man also mistakenly opened his room door soon after entering hotel quarantine, but she does not believe the incident is responsible for the virus escaping.
Victoria's deadly second wave of coronavirus was sparked from leaks in hotel quarantine.
It led to a major overhaul of the hotel quarantine system after Melbourne spent 112 days in lockdown.
Some 28,485 Victorians were tested on Tuesday and 19,533 received a vaccine dose at state-run sites.
There are now 83 active cases across the state.