A tale of two cities in Melbourne and Sydney

It was a tale of two cities in Australia's major hubs on Wednesday (July 1) as Sydney further relaxed restrictions, while parts of Melbourne locked down.

The legendary Randwick Ritz was one of the first cinemas in Sydney to reopen, with movie-goers relieved to be back in their seats.

"It's fantastic, it's a fantastic feeling to be out and about after so much time in lockdown."

Other performance venues and theme parks were also allowed to open up in New South Wales, with social distancing requirements of one person per four square metres being applied.

But it was a different story further south, with authorities locking down more than 300,000 people in suburbs north of Melbourne for a month to contain the risk of infection after two weeks of double-digit rises in new cases.

More than 30 suburbs in Australia's second-biggest city will return to stage-three restrictions, the third-strictest level.

That means residents will be confined to home except for grocery shopping, health appointments, work or caregiving, and exercise.

Victorian Premier Daniel Andrews says the state needs to work collectively.

"If we all work together, if we all follow the rules then we will beat this and we will be able to bring some stability to those hot spots, drive down case numbers and then resume our program of cautious easing."

The spike in cases has been linked to staff members at hotels housing returned travellers, for which quarantine protocols were not strictly followed. Victorian state authorities have announced an investigation into the matter.