"I'm not trying to blame anyone, I'm simply trying to explain ... how could it have gone up by so much, so fast," Premier Daniel Andrews said on Thursday.
They bring the total number of active cases to 11,018 and the death toll of the current outbreak to 41.
Victoria's COVID-19 commander Jeroen Weimar described Thursday's jump as a "significant" setback in the state's reopening plan.
"We know that everyone is fatigued, tired of this. But today is a significant setback in how we manage this outbreak," he said on Thursday.
"If we are seeing continued spread, it will have grave implications for our nurses, ambulance workers, for our hospitals and for people who need care, whether they need care for coronavirus, or whether they need care for other purposes."
Mr Weimar said contract tracers have informed the government that the steep rise in case numbers can be attributed to illegal gatherings over the grand final weekend.
"The contact tracers tell us that there have been significant numbers of social gatherings on Friday and Saturday, over a long weekend. Grand final parties. Other social gatherings, barbecues, backyard visits.
"This has generated significant caseload. A third of our cases are due directly to those different types of social gatherings, as people have dropped their guard, and decided now it’s the grand final weekend, it’s the long weekend, we deserve a bit of a pay back, we deserve a nicer time.
"And that has now translated into additional 500 cases from when we expected to see today."
Mr Andrews acknowledged the more than 50 per cent increase in case numbers was of concern to Victorians, and said they would continue to rise if people broke lockdown rules.
"Particularly given what we know from interviews over recent days, plenty of these cases were completely avoidable," he said.
"I know it's incredibly frustrating, I know it's been incredibly hard. This has been the longest journey."
Pfizer interval reduced
To help combat the growing outbreak, the premier announced the government will reduce the Pfizer interval in state hubs to three weeks as of 4 October. Anyone who has received their first dose of Pfizer will be able to bring their second vaccination forward, he said.
He said 88,000 Moderna doses will be transferred from the pharmacy network to state hubs as they couldn’t be used up fast enough.
The premier said the state's 70 per cent double dose milestone was in sight, with more than 80 per cent of Victorians over 16 having received their first dose. Nearly 50 per cent of over 16-year-olds are now fully vaccinated.
Mr Andrews said Victoria's trajectory towards reopening was dependent on Victorians doing the right thing.
"If we continue to see this sort of behaviour, we’ll continue to see these numbers," he said.
"It’s not about one day, if you get this each day, every day of the week, you’re putting avoidable pressure on all sorts of different systems, most notably our public hospital system."
Mr Weimar said controlling the outbreak remained within reach if people abided by the rules and got vaccinated.
"Today highlights the consequence of hundreds of people dropping their guard," he said.
"I think we’re at a key decision point as Victorians from where we go from here. We need to decide if we’re going to push through the fatigue and get the job done.
"At the end of October, we should get to our 70 per cent fully vaccinated status, and that gives us all hope for a much better and cleaner future.
"But we need to get the vaccination job done in the next few weeks ahead."
There were 65,497 tests processed and 34,323 vaccine doses administered at state hubs on Wednesday.
Of the deaths reported on Thursday, one was in their 90s, one was in their 80s, two were in their 70s and one was in their 60s.
Mr Andrews said that 398 people are currently in hospital with COVID-19. Of those, 83 are in intensive care and 57 are on a ventilator.
New cases among younger Victorians
Mr Weimar said the new cases showed "quite a different profile to what we've seen for the rest of the outbreak".
"We’re seeing a disproportionate increase in those aged between 20 and 29, and those aged 20 and 50. Fifty five per cent of the cases are in their 20s, 30s, and 40s."
He added that six out of 10 were from new households with new cases emerging across the southeastern and eastern suburbs.
"We’ve seen a significant sparking off of new households, jumping from known households to fresh territory.
"Unlike in previous days and weeks, we’ve been reporting a very static picture. Now a quarter of all today’s cases, 329 of them, are in the east and south-eastern suburbs. And the map is far more diverse than before.
"We have a far greater scattering into new suburbs, new communities, new households, that haven’t been touched by coronavirus before in this or any of our recent outbreaks."
Extension of business grants
With lockdown continuing until vaccination milestones are reached, the state and federal governments are extending a jointly funded business grants package for six more weeks.
Up to $2.27 billion for small to medium-sized businesses was announced on Thursday for those most affected by restrictions as Victoria reaches the 70 per cent, then 80 per cent fully vaccinated thresholds, forecast for about 26 October and 5 November respectively.
More than 160,000 businesses will be eligible for the support, ranging from retailers and gyms to hairdressers and hotels - mostly through automatic deposits into their bank accounts.
Also from Thursday, Victorian residents in extreme risk zones such as Greater Sydney can apply for a permit if they are fully vaccinated, test negative within 72 hours of departure and isolate at home for 14 days.
Those who have been to an exposure site, are close contacts of a COVID-19 case or with symptoms will be knocked back, while non-Victorians are not eligible.