"States need to keep calm and carry on. And not overreact to the Omicron variant," Frydenberg told reporters in Melbourne.
Australia is one of the world's most vaccinated countries, with nearly 90% of people over 16 fully inoculated. Still, Australia said it found 1,753 COVID-19 cases in the past 24 hours, up about 3% in the last week and the highest daily total since Oct 29.
Frydenberg said state and territory leaders must loosen curbs implemented to slow the spread of the virus, emphasising the need to accelerate Australia's economic growth while he played down concerns about the Omicron variant.
"Our economic recovery depends upon it. We have the vaccination rates now at record highs and that has proven to be a vital defence against Covid."
While some measures have been eased as vaccines were rolled out, interstate travel is still prohibited between several states and capacity limits in shops and restaurants are strictly enforced.
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