It is the first time since September 28 that the daily number of cases has been below 1000 and follows 1471 new infections yesterday.
Nine people with the virus have died within the last 24 hours.
An audience of up to 10,000 will be allowed to watch the race, following a spectator-free event last year.
But the usual festivities will still be affected by the remaining restrictions.
The spectators will be divided into different seating zones, and food and drinks will only be served as part of the table service.
It will also be mandatory to wear masks.
Anyone who chooses to leave the racetrack in favor of a home event will be able to have up to 10 people over, while up to 30 can gather outdoors.
Players at the pub must comply with the rule of one person per. four square meters.
Victoria registered 1471 new COVID-19 cases and four deaths yesterday when Melbourne Airport reopened for returning Australians.
People return to Flemington for the first time since the lockdown to Derby Day
Regular international flights have resumed to the Victorian capital, with no quarantine required for fully vaccinated arrivals.
Domestic travel has also opened up for Victorians to some extent, where fully vaccinated people are now free to enter and return from New South Wales.