The border between Australia's two most populous states will close from Tuesday for an indefinite period as authorities scramble to contain an outbreak of the coronavirus in the city of Melbourne.

The decision announced Monday marks the first time the border between Victoria and New South Wales (NSW) has been shut in 100 years. Officials last blocked movement between the two states in 1919 during the Spanish flu pandemic.

"It is the smart call, the right call at this time, given the significant challenges we face in containing this virus," Victoria Premier Daniel Andrews told reporters in Melbourne.

The move will, however, likely be a blow to Australia's economic recovery as it heads into its first recession in nearly three decades.

The number of COVID-19 cases in the Victorian capital of Melbourne has surged in recent days, prompting authorities to enforce strict social-distancing orders in 30 suburbs and put nine public housing towers into complete lockdown.

The state reported 127 new COVID-19 infections overnight, its biggest one-day spike since the pandemic began. It also reported two deaths, the first nationally in more than two weeks, taking the national tally to 106.

NSW Premier Gladys Berejiklian said there was no timetable for reopening the border, which will be patrolled by the military to prevent illegal crossings from 11.59 p.m. local time on Tuesday.

The state line is highly porous, with 55 roads, wilderness parks and rivers. Some businesses straddle both sides and several workers, and school children, commute daily.

Lyn McKenzie, who runs a paddle steamer business along the Murray River from Mildura, a border city of 30,000 people, is waiting for more detail to gauge the full impact on her business.

McKenzie lives on the NSW side of the river. The boats pick up passengers from the Victoria side and the river itself is classified as part of NSW.

"I'm seeing this as possibly needing to shut down again, but it's a bit early for me, not knowing the exact details," McKenzie told Reuters.

Berejiklian said people would be able to apply for daily permits to cross the border, but added there would be delays of around three days in issuing the passes.

Paul Armstrong, who runs a petrol station in Wodonga, a border town on the Victorian side, said his children live in New South Wales but go to school in Victoria.

"I wonder if they will need permits," Armstrong said. Schools in Victoria are in their second week of the two-week winter vacation. Schools in New South Wales began their two-week term break on Monday.

NSW Police Commissioner Mick Fuller said the military would provide round-the-clock aerial and other surveillance to enforce the closure. Victoria's only other internal border, with South Australia state, has been closed since March 22 under previous coronavirus measures.

Melbourne lockdown

Australia has fared better than many countries in the coronavirus pandemic, with just short of 8,500 cases so far, but the Melbourne outbreak has raised alarm bells.

The country has reported an average of 109 cases daily over the past week, compared with an average of just nine cases daily over the first week of June.

Melbourne locals are concerned that renewed social distancing measures have not been implemented uniformly across the city.

"Without a full Melbourne lockdown, I am not super confident this is going to be contained," Jack Bell, a lifeguard who lives in the Victorian suburb of Kensington, told Reuters.

Kensington is one of the 30 suburbs that have reimposed social distancing measures. The nine public housing blocks that have been subjected to a complete lockdown, Australia's first, are in neighboring North Melbourne and Flemington.