Victoria will increase its cap on non-urgent surgeries at private hospitals by a quarter, while public hospitals can resume up to 50 per cent of capacity in some regional areas.
The state government said, beginning on Monday, public hospitals in Ballarat, Bendigo, Shepparton and the Latrobe Valley will be permitted to resume up to 50 per cent of normal elective surgeries.
Previously, only private hospitals and day procedure centres were permitted to perform non-urgent surgeries up to 50 per cent capacity, but this will rise to 75 per cent from Monday.
Major public hospitals in Melbourne and Barwon Health will continue to only provide urgent and emergency surgeries.
This is to ensure there is "adequate capacity within the health system" to care for patients with COVID-19 requiring hospitalisation, the government said in a statement.
The situation will be monitored to ensure there is capacity, in case hospitalisations surge.
"Reducing hospitalisations has given us the flexibility to further expand elective surgery and help ease the burden on Victorians waiting for procedures," health minister Martin Foley said.
"We will continue to monitor the situation closely so that we are ready to respond to any surges in COVID-19 activity, while also making sure we are supporting the dedicated staff who keep our operating theatres running."
The decision comes after health bodies, including the Royal Australasian College of Surgeons, called for the government to ditch surgery caps all together due to growing wait lists.
RACS sent a proposal to the state's health department to support "rapid" change to the current system.
It is calling for more transparency about how these decisions are made, and said many small private hospitals should be permitted to recommence surgery with no cap, since they do not form part of the COVID response.
However, a Victorian government spokeswoman said it would "continue to adopt a staged approach" to increasing non-urgent surgeries.
As of September 30, 67,000 Victorians were waiting for elective surgeries.