More than five million people in Australia's second-biggest city of Melbourne have been ordered into a snap week-long lockdown, as officials blamed a slow vaccine roll-out and hotel quarantine failures for another virus outbreak.

Stay-at-home orders will apply to Melbourne and surrounding Victoria state from midnight for seven days, acting state Premier James Merlino told residents, as the cluster doubled to 26 cases.

"In the last day, we've seen more evidence we're dealing with a highly infectious strain of the virus, a variant of concern, which is running faster than we have ever recorded," Mr Merlino said.

The variant detected is known as B.1.617 - which has spread widely in India - and is believed to have been transmitted from a traveller who returned to Australia from overseas.

Schools, pubs and restaurants are set to close, while gatherings will be banned and mask-wearing made mandatory.

New Zealand has already suspended its travel bubble with Victoria and residents are now being shut out of other Australian states, prompting major airlines to slash Melbourne services.

The "circuit-breaker" lockdown is designed to allow contact tracers to get on top of cases, with residents permitted to leave home only for essential reasons including getting vaccinated.

Mr Merlino said the conservative federal government's sluggish vaccine roll-out was partly to blame for the latest lockdown, saying it was "not where it should be".

"If more people were vaccinated, we might be facing a very different set of circumstances than we are today. But sadly we are not," he said.

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It is the fourth time Australia's second-biggest city has been plunged into lockdown since the pandemic began, including nearly four months of harsh restrictions last year.

Thousands of people across Melbourne were already self-isolating after positive cases attended dozens of locations including two separate Aussie Rules football matches, a series of nightclubs and a medieval battle re-enactment.

Slow vaccine roll-out

In recent months, Australians had largely been enjoying few restrictions after the country successfully contained the spread of coronavirus, but critics say a glacial vaccine roll-out has left the nation vulnerable to outbreaks from hotel quarantine facilities.

The virus has leaked out 17 times in six months, according to the federal opposition Labor party, which has slammed the conservative government for refusing to overhaul the system.

"If we had an alternative to hotel quarantine for this particular variant of concern, we would not be here today," Mr Merlino said.

Also under pressure over failing to meet initial vaccine delivery targets - with about 3.7 million vaccination doses administered so far in a population of 25 million - the government has pledged additional batches will be sent to Victoria in the coming weeks.

Prime Minister Scott Morrison batted away the criticisms, saying "no system is foolproof" and pointing to Australia's comparatively successful coronavirus response globally.

"We will do everything we can to protect the lives and livelihoods of Australians, and we have lost 910 souls to Covid already during the course of this pandemic. Of course that is not anything near what we have seen in other countries," he said.

Mr Morrison urged eligible Australians to get vaccinated, saying the "wonderful and enviable" way of life Down Under during much of the pandemic had led to some vaccine hesitancy.

Health Minister Greg Hunt added that first vaccine doses were now being delivered to the remaining aged care homes in Victoria, where hundreds died when the virus swept through the facilities last year.

In Melbourne, tens of thousands joined lengthy queues to be tested for Covid-19, while others rushed to get jabbed as the state opened up mass vaccination centres to people aged 40-49 for the first time.

Australia has recorded about 30,000 Covid-19 cases to date - the vast majority in Victoria during last year's second wave.