Premier Daniel Andrews says Melburnians will soon be allowed to visit each other, but warns that homes are "the most dangerous place for the spread of this virus".
From Wednesday, two adults from one household will be able to visit another home accompanied by any dependents.
Households will be restricted to one social gathering per day, meaning those who receive visitors can't go to someone else's home that same day.
Melburnians have previously only been able to welcome partners into their homes, or friends via the "single bubble".
Under the latest arrangements, people will also have to stay within their 25km travel limit.
Mr Andrews described the home as the "most dangerous place" for the spread of coronavirus.
"I know that jars with people, it may not sound right, but when you think about it, that's where people let their guard down, where people are not being supervised," he told reporters on Tuesday.
Homes were not a controlled environment like hospitality venues where social distancing can be enforced and industrial cleaning takes place, he noted.
Households have been asked to keep a record of who has visited their home and when, to enable easy contact if an infection emerges.
Mr Andrews encouraged people to wear masks while visiting, but conceded it was impossible to enforce.
"I'm just being frank about it. We're not going to have police knocking on every door every day, but we just ask people to use some common sense," he said.
The restrictions on gatherings at home will remain in place beyond November 8, when the 25km limit and the "ring of steel" separating the city from regional Victoria is lifted.
Masks will remain mandatory outdoors across the state for the rest of the year and probably into 2021, and should be worn inside gyms for most activities apart from running on a treadmill.
The government also released advice that home businesses such as hairdressers will be able to reopen if they have a "discrete retail area", while cleaners and maintenance workers may attend homes provided they wear a mask and keep to the minimum necessary.
Halloween trick-or-treating is permitted this Saturday so long as it's "contactless", with people still barred from entering property including front yards and doorknocking.
It comes as Victoria recorded a second consecutive day of no new cases of coronavirus or deaths. The last time Victoria reported consecutive days of zero cases was March 5 and 6.
Melbourne's 14-day case average is down to 2.8 and there were six mystery cases in the fortnight to October 24. The corresponding figures for regional Victoria are 0.2 and zero.
There are 87 active cases of COVID-19 in Victoria, with five in hospital and one in intensive care.
From Wednesday, retail will reopen along with cafes, restaurants and pubs, though there are some restrictions on numbers.
Mr Andrews says it's important Victorians continue to get tested for COVID-19, even if they have only the mildest symptoms.
Some 15,000 people were tested on Monday.
"There's no vaccine, which means getting tested, following the rules, playing your part, making good choices for your family and every family," he said.
He conceded there would be new COVID-19 cases and outbreaks, but the state was "well-placed" to manage them.
Victorian Chief Health Officer Brett Sutton said the state's contact tracing was the best in Australia.
"Our biggest challenge now is complacency," he said.
Professor Sutton was confident an outbreak in Melbourne's northern suburbs, which delayed the easing of restrictions by 24 hours, was under control.
To date, 817 Victorians have died from the virus, while the national figure stands at 905.
Australian Associated Press