The Australian state of Victoria will go into a snap five-day lockdown from tonight in response to a growing coronavirus cluster.

Victorian Premier Daniel Andrews announced this afternoon a five-day "circuit-breaker" lockdown for all of Victoria would go into effect from 11.59pm tonight (local time).

Andrews said the lockdown was needed because some of the new cases had the UK strain, which was "hyper-infectious" and posed a huge challenge to the state.

He said it was very difficult to do effective contact tracing due to the "speed at which this UK variant moves".

"If we wait for this theory that it might be out there, that there might be more cases, it might be too late."

Victorians will only be allowed to leave their homes for the following reasons: essential supplies, care and caregiving and exercise and essential work. No visitors are allowed.

Exercise and shopping will be limited to 5km from people's homes.

Masks must be worn in all public spaces. Retailers will close, with exceptions for essential businesses, and public gatherings will not be permitted. Schools and places of worship will close.

Andrews said health officials now predict that there are further undetected cases in the community.

"I know it's not the place that we wanted to be in," he said. "However, we've all given so much, we've all done so much. We've built something precious, and we have to make difficult decisions, and do difficult things, in order to defend what we've built.

"I am confident that this short, sharp circuit-breaker will be effective.

"I want to be here on Wednesday next week announcing that these restrictions are coming off, but I can't do it on my own. I need every single Victorian to work with me, and with our team, so that we can run this to ground and we can see this strategy work."

He said the UK varient was posing huge problems to the contact tracing effort.

"It is moving at a velocity that has not been seen anywhere in our country over the course of these last 12 months," he said.

It will be the state's third lockdown since the start of the pandemic.

It is understood that state government advisers met overnight to draw up a framework for another lockdown as a Covid cluster linked to Melbourne's Holiday Inn MIQ facility grew overnight to 13 cases.

The state's Cabinet met for an emergency meeting at 11.45am — where it was understood a snap five-day lockdown was on the table.

At the same time, federal senators who are based in Melbourne were heading to Canberra.

Authorities are not only concerned about the Holiday Inn cluster, but also about virus fragments detected in wastewater across Melbourne.

A source close to Emergency Management Victoria told the Herald Sun earlier today authorities feared they had lost control of the outbreak — describing scenes of "pandemonium" at the agency.

They told the newspaper there were deep concerns at the failure of contact tracers to match information they had been given by confirmed cases and their close contacts with what the results of sewage testing were showing about the virus' spread.

Officials are working with the theory that all of the cases linked to the Holiday Inn outbreak are UK strain cases — meaning it could spread a lot more quickly than the strain that took hold of Victoria last year.

Prime Minister Scott Morrison told 3AW earlier today the Victorian government was looking at all options.

The Prime Minister said that the traumatising impact of the lockdowns on Victorians was very "real" and he understood why it was upsetting news that the option was on the table.

But he suggested a short, sharp lockdown had worked in the past interstate to give contact tracers a head start.

"The short, sharp proportionate response that we saw in other states proved to be quite effective. We saw that work in Brisbane. It worked in NSW."