Victoria's streak of no new coronavirus deaths or cases has hit 10 consecutive days.
As travel restrictions ended on Monday, the state reported two mystery cases to Friday and only four active cases.
Heavy traffic was being reported on roads out of Melbourne on Monday morning after a "ring of steel" separating the city from the rest of Victoria ended at midnight.
Melbourne's 25km travel limit has also been scrapped.
Regional areas had been off-limits to Melburnians for months as the city lagged behind in its second wave fight with COVID-19.
"We know that so many people have missed those that they love the most, those who they need to see, been desperately keen to see, for such a long period of time," Premier Daniel Andrews told reporters on Sunday.
Apart from the lifting of travel restrictions, the premier also announced a number of other rule changes.
Hospitality venues can now host up to 70 patrons outdoors and 40 indoors, while a maximum of 20 people will be allowed in gyms, libraries, community centres, galleries, museums and cinemas.
Aged care residents are able to have visitors from one household per day for two hours, and partners can visit maternity wards indefinitely.
Worker caps on meat, poultry and seafood industries are also gone, but anyone who is able to work from home must continue to do so and masks remain mandatory outdoors.
Victoria continues to record zero cases of coronavirus. Source: AAP
Looking ahead, Mr Andrews flagged statewide rules would next ease on 22 November.
Victoria's peak tourism and police groups welcomed the end of the regional divide but the Victorian Chamber of Commerce and Industry said a plan is still needed for the return of functions, events and office workers.
Opposition Leader Michael O'Brien said Sunday's announcement was long overdue, suggesting Victorians could be forgiven for wanting more of their freedoms back.
"When you see only four active cases in a state of 6.5 million people ... you've got to ask: didn't we deserve a bit more than what we got today," he told reporters.
The state's death toll from coronavirus remains at 819 and the national figure is 907.
NSW has recorded no new local cases of COVID-19 for the second day in a row, as well as seven cases from overseas travellers in hotel quarantine.
People in Australia must stay at least 1.5 metres away from others. Check your jurisdiction's restrictions on gathering limits.
If you are experiencing cold or flu symptoms, stay home and arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080.
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