All state school staff will be entitled to half a day of paid time off to get their vaccine.
"Anyone who works on-site at schools or early childhood settings, they will not be able to work on-site if they are not vaccinated," Mr Merlino told reporters in Melbourne.
He said a survey of 33,000 teachers found 75 per cent were already fully vaccinated.
The state government will spend $190 million to make sure schools are properly ventilated by the start of term four, including the rollout of 51,000 ventilators.
Some $60 million will be spent on installing shade sails at 2149 schools to create more outdoor learning spaces.
A Ventilation Technical Advisory Panel will be established to undertake further risk assessments of other environments including early childhood settings and youth justice facilities.
Year 12 students will be the first to return to face-to-face learning on 5 October 5, with a staggered return of other years starting with prep to year two on 18 October.
The remaining year levels will be able to return on 26 October, but only year 7 and year 11s will be able to attend five days a week.
Victoria recorded 628 new local coronavirus cases and three more deaths in the 24 hours to midnight on Tuesday.
The state health department said 43,056 vaccines were administered in state hubs and 60,829 test results received in the 24 hours to midnight on Tuesday.
The seven-day long lockdown in the regional Victorian city of Ballarat will end at 11.59pm Wednesday after no new cases were recorded there for the first time in more than a week.
There are 18 active cases in Ballarat across six households and dozens of exposure sites.
"The public health team feel that they have the outbreak contained," Mr Merlino said.
"Thanks to the extraordinary efforts of Ballarat residents who came out in droves to get tested and who followed the lockdown rules."
Police were out in force in Melbourne on Wednesday as people took to the street for a third day of protests against the state government and COVID-19 vaccines.
Construction sites across Melbourne, Ballarat, Geelong, Mitchell Shire and the Surf Coast were shut down for two weeks late on Monday, following the first day of demonstrations.
Daniel Andrews condemns demonstrations as Melbourne braces for more protests
Premier Daniel Andrews said he was “gutted” to shut the industry for two weeks, but the move was forced due to the high number of COVID-19 cases in the sector.
“There are more coronavirus cases in construction than there are in aged care, more cases of coronavirus in the construction sector than there are patients with coronavirus in hospital across the whole hospital system,” he told reporters on Wednesday.
Mr Andrews said nearly 90,000 people were vaccinated across the state on Tuesday.
“Vaccination is our pathway out of this,” he said.