MELBOURNE: COVID-19 cases in Australia's Victoria state surged to record levels on Thursday despite Melbourne, the state capital, being stuck in a hard lockdown for nearly two months as officials race to vaccinate the population before easing curbs.

A total of 1,438 new infections were reported, the majority in Melbourne, eclipsing the previous daily high of 950 on Wednesday. Five new deaths were recorded in the state.

Australia's largest cities, Sydney and Melbourne, and the capital Canberra are in a weeks-long lockdown to combat a third wave of infections fuelled by the fast-moving Delta variant. Authorities have ditched a COVID-zero strategy and are looking at higher vaccination as their exit strategy from lockdowns.

The record cases in Victoria come as the federal government on Thursday decided to phase out its emergency financial support for businesses impacted by the lockdowns, in line with its plan to end support to virus-impacted employees.

Federal Treasurer Josh Frydenberg said the temporary payments will stop once 80% of the adult population in states and territories becomes fully vaccinated.

But Victoria's businesses will receive a fresh A$2.27 billion ($1.65 billion) support from the federal government through the next six weeks at which point the state should hit that dosage target, from around 50% now.

"We can't eliminate the virus, we need to learn to live with it in a COVID-safe way", Frydenberg said in a statement.

The federal government decision to wind down support payments, shared equally between states and Canberra, will put pressure on virus-free states to keep their economies open and avoid lockdowns to fight future outbreaks.

Prime Minister Scott Morrison has been pressing all states and territories to begin living with the virus once full inoculations reach 70%-80% but Queensland and Western Australia, largely COVID-free, flagged they may delay their reopening.

Despite the latest Delta outbreaks, total cases in Australia stand at around 104,000 and deaths at 1,283, well below other comparable nations.