Health Minister Martin Foley announced the new measures will come into effect from midnight on Friday in the wake of the outbreak growing to 28 cases.
Anyone who lives in or has visited the northern beaches and other high-risk locations will be banned from entering the state.
With the situation expected to deteriorate, Mr Foley advised Victorians not to travel to Sydney.
"It won't be the Christmas or the holiday you were planning," he told reporters.
There are 47 flights from Sydney scheduled to arrive in Melbourne on Friday, with health department officials conducting spot checks on those planes.
Passengers are being asked if they've visited the northern beaches or the other listed hotspots and, if so, being directed to get tested and self-isolate immediately.
Victoria has now gone 49 days without a locally acquired case of COVID-19.
Another infection was recorded among a returned traveller on Friday, the eighth since the state restarted its new-look hotel quarantine program on December 7.
QLD KEEPS NSW BORDER OPEN
Queensland will impose hotel quarantine on all travellers who have visited the northern beaches from 1am on Saturday, but the NSW border will stay open.
"At this stage we will continue to observe that hotspot regime and that has been consistently followed throughout Australia as well," Premier Annastacia Palaszczuk told reporters on Friday.
"I just want to give people that sense of security, in terms of we are following practices that other states and territories are also at this stage. So I just want to alleviate people's concerns there."
Chief Health Officer Jeannette Young said authorities are tracing everyone who came into contact with a Sydney woman who visited Queensland while infectious.
The woman in her 50s arrived in Brisbane on Virgin Airlines flight 925 at 9:30am on Wednesday before having lunch at the Glen Hotel at Eight Miles Plains.
She later stayed at a hotel on the Sunshine Coast, where she only came into contact with a receptionist, before driving a hire car back to Sydney via Brisbane.
Dr Young is confident that broad contact tracing will find anyone who's potentially at risk, but she urged people to still come forward and get tested.
"The message remains exactly the same as it has always been: anyone in Queensland today who has any symptoms that could be related to COVID-19, so broadly any symptoms, should immediately come forward to one of our many testing sites across the state and get tested," she said.
SA WATCHING VIRU OUTBREAK
South Australia will not immediately close the border with NSW in response to a growing cluster of COVID-19 cases in Sydney.
Premier Steven Marshall says local officials are monitoring the outbreak carefully and are happy with the work being done to trace people who may have come in contact with the virus.
But he has flagged some restrictions for people who come to SA from those hotspot areas on Sydney's northern beaches.
They will be announced later on Friday, but will include a three-day lockdown for those travellers which could be extended should the situation escalate.
Mr Marshall said South Australia would not make any "kneejerk reactions" but would not hesitate to take further steps if required.
"If there's a necessity for us to escalate our restrictions, we won't hesitate to move," the premier said.
We will continue to listen to the health advice about what we need to do to keep our state safe. But at the moment we are satisfied with the excellent work NSW Health are doing to essentially put a net over that cluster.
It comes just days after South Australia moved to drop its border checkpoints and dispensed with the need for travellers to register online before coming into the state.
However, people arriving by plane from Sydney are now being quizzed on whether they have been to the city's northern beaches in recent days.
No new virus cases were reported in SA on Thursday, with the state less than a week away from declaring its recent Parafield cluster of infections officially over.
Authorities consider two incubation cycles, or 28 days, the necessary timeframe before an outbreak can be declared officially eliminated.
December 23 has been identified as the day after that period ends for the cluster, which stands at 33 infections.
None of those cases are still considered active.