VICTORIA'S hard border with New South Wales will soften from tonight as the state establishes a new permit system for domestic travellers.

The new permit system goes live from 5.59pm on Monday, with current permits to remain valid so long as they are consistent with public health advice.

The new permit system is based on a traffic light system, with regions in other parts of Australia designated as green, orange or red zones depending on the coronavirus risk in a particular area.

Border zone residents will still be able to cross the border just using their drivers licence or other ID with proof of address without needing to quarantine.

Regional NSW will be reclassified as an orange zone, allowing people stuck in NSW to enter Victoria if they return a negative COVID-19 test on arrival.

Under the new system, anyone who has been in a red zone in the last 14 days will not be allowed to enter Victoria without an exemption.

Anyone coming from an orange zone can apply for a permit and will need to take a coronavirus test within 72 hours of arriving in Victoria, isolating before and after the test until they receive a negative result.

Anyone travelling from a green zone can apply for a permit and enter Victoria without needing to quarantine or get tested.

Announcing the new permit system on Monday afternoon, Premier Daniel Andrews said the new system would make rules around interstate travel clearer.

"With an easy to understand traffic light system, Victorians and Australians will understand exactly what the latest public health advice means for them and their travel plans," he said.

More information on the new permit system will be made available through the Service Victoria portal at service.vic.gov.au.