An overnight curfew in Melbourne will be lifted tomorrow, almost two months after it was imposed to counter a surging coronavirus outbreak.

Residents had been barred from leaving their home between 8pm and 5am except for urgent medical care,

Victoria state Premier Daniel Andrews said those living in Australia's second largest city will now be free to leave their homes at any time for work, exercise, to buy essentials or provide care.

The relaxation comes after 16 new infections and two deaths were reported in Victoria and the state's active cases fell below 400 for the first time since 30 June.

The Melbourne overnight curfew was imposed on 2 August along with a raft of other restrictions as cases of coronavirus soared in the city of roughly five million.

Chief health officer Brett Sutton said it was "not a proportionate measure to have in place going forward" given the low case numbers.

However, people will still be confined to within 5km of their homes and fines for breaching other restrictions will be increased to almost Aus$5,000 (€3,000) to deter parties.

"We don't make this decision lightly but no-one has the right to put everything that Victorians have done at risk... and potentially spreading the virus," Premier Andrews told a press conference.

Victorian Premier Daniel Andrews speaking at a press briefing today

Melbourne became the epicentre of Australia's second wave after security bungles led to the virus escaping from hotels used to quarantine travellers returning from overseas.

Mr Andrews said several other restrictions will also be lifted, allowing workers in a number of industries to return and small religious services to resume.

Primary school students will be back in classrooms from mid-October and childcare centres will reopen immediately.

Visits to hospitals and aged care facilities can resume with strict conditions but visits to homes will remain banned and outdoor gatherings limited to five people from two households.

Mr Andrews said the evidence was "irrefutable" that homes were "one of the most risky environments" for transmission of the virus.