Scott Morrison has warned attempting to eliminate the coronavirus would destroy the Australian economy.
The prime minister is instead persevering with a suppression strategy, as authorities attempt to tame rising infection rates in Victoria and NSW.
Mr Morrison says the strategy relies on the strength of state and territory health systems, and their ability to track and trace coronavirus cases, along with adherence to social distancing rules.
"You don't just shut the country down because that is not sustainable," he told Triple M on Wednesday.
"You would be doubling unemployment, potentially, and even worse. The cure would be worse than what arguably wouldn't be delivered anyway."
Mr Morrison pointed out an ongoing Victorian outbreak, which has claimed several lives, was sparked by a quarantine breach.
"Unless we're going to not allow any freight or any medical supplies into Australia, or not allow any exports or anything like this, there is always going to be a connection between Australia and the rest of the world," he said.
"The right strategy is the one that we have all together been pursuing as a country, and the national cabinet has been very important to ensure everyone is moving in the same direction."
The prime minister confirmed a NSW coronavirus cluster, which has triggered a backlash in Queensland and South Australia, came from Victoria.
He also backed Victorian Premier Daniel Andrews' consideration of more severe lockdowns across Melbourne.
"He's not ruling anything out, which is understandable in the circumstances," Mr Morrison said.
The outbreak in Victoria continues to climb, with 238 new cases recorded on Wednesday.
A woman in her 90s died overnight, taking the state toll to 27.
More than a quarter of people who have been hospitalised with the virus are in intensive care, with dozens needing ventilators in Victoria.
Federal Health Minister Greg Hunt says Melburnians and other Victorians are in "the great fight of our lives".
Mr Hunt confirmed eight Victorian aged care facilities have residents with coronavirus, while a further 24 nursing homes have staff infected.
In NSW, there are now 34 cases linked to a pub in southwest Sydney, prompting the restrictions on gatherings at licensed venues to be tightened again.
Anyone who attended the Crossroads Hotels in Casula between July 3 and 10 must get tested for coronavirus and self-isolate for 14 days even if the result is negative.
The Northern Territory has declared the entire area of greater Sydney a coronavirus hotspot for travel restrictions, while Queensland has singled out Campbelltown and Liverpool.
Mr Hunt has warned there will be more deaths from coronavirus.
"I think if we are honest, there will be more lives lost. There will be more people admitted to ICU and more on ventilation," he told the Nine Network.
Mr Hunt said Australia would have to cut itself off from the outside world if it hoped to eradicate the disease.
"That would mean obviously no gatherings, no protests, no trade, no returnees from overseas, no family reunions."
Australian Associated Press