The shutdown was announced late on Monday following violent protests outside the CFMEU's head office in Melbourne's CBD over a vaccine mandate for the industry.
It applies to work sites across Melbourne, Ballarat, Geelong, Mitchell Shire and the Surf Coast.
Industrial Relations Minister Tim Pallas said the shutdown was required to cut down movement, reduce COVID-19 transmission and give the industry time to adapt to the new requirements.
'We put the industry on notice just a week ago, we have seen appalling behaviour on-site and on our streets, and now we're acting decisively and without hesitation,' he said in a statement.
An amnesty was in place on Monday so that a limited number of workers can attend construction sites to shut them down safely.
The government said all sites will need to demonstrate compliance with the chief health officer's directions prior to reopening, including the requirement for workers to show evidence of having had one dose of a COVID-19 vaccine before they return to work on October 5.
The Property Council of Australia said the shutdown would cost the economy $1.1 billion a week.
'The majority of construction sites and construction workers are doing everything required of them to meet the highest standards of COVID safety and have done so since the pandemic started,' executive director Danni Hunter said in a statement.
'Closing the industry will prevent them going to work and getting paid and it will stall projects causing immensely costly delays, putting projects and Victorian jobs at risk.'
Opposition industry spokeswoman Bridget Vallence said the Andrews government must immediately reverse its 'panicked decision'.
'The Liberal Nationals condemn the violent protests, but the actions of a few should not be used as an excuse to shut down an entire industry, putting tens of thousands of people out of work,' she said in a statement.
Union officials say Monday's protesters were not all CFMEU members and blamed 'neo-Nazi's and right-wing extremists' for hijacking the event.
The protest escalated when two union officials, including Victorian construction branch secretary John Sekta, came outside the Elizabeth Street office to speak to protesters just before midday.
Mr Setka was met with boos and insults from the crowd, while some protesters hurled bottles.
Violence escalated even further on Tuesday, with 2,000 protesters storming the West Gate Bridge, bringing traffic to a standstill and evening attacking cars
Organisers have vowed to host protests 'every day' until the mandatory vaccine mandate for tradies is dropped
Construction sites have been a place of high spread in the latest outbreak, forcing health officials to close tearooms last week.
The state's roadmap out of lockdown was released on Sunday, detailing small changes to restrictions when 80 per cent of Victorians aged over 16 have received a single vaccine dose.
Melbourne's lockdown will remain in place until 70 per cent of Victorians are double-vaccinated, which is forecast for October 26.