No spectators will be allowed to watch the Australian Grand Prix if it goes ahead on the weekend.
Victorian Premier Daniel Andrews said that while the event could still go ahead there will be no fans at the Albert Park race track.
"On public health grounds, there will be no spectators at the Grand Prix this weekend - if a race actually happens at all," he said.
He said it was up to the event organisers to decide whether the race would still go ahead.
Earlier, Australian Grand Prix boss Paul Little insisted the formula one season-opener would go ahead despite multiple reports the race would be cancelled due to coronavirus.
The McLaren team has withdrawn from the event in Melbourne after a team member tested positive for coronavirus.
Despite widespread media reports overnight that the race won't proceed, Mr Little has told the Nine Network on Friday that the Grand Prix is going ahead.
Eight F1 team members had been tested for coronavirus with results released on Thursday revealing one, from McLaren, had tested positive to the potentially deadly virus,
McLaren subsequently withdrew from the event, due to start on Friday with practice sessions for Sunday's Grand Prix.
"The decision has been taken based on a duty of care not only to McLaren F1 employees and partners but also to the team's competitors, Formula 1 fans and wider F1 stakeholders," McLaren said in a statement.
"The team member was tested and self-isolated as soon as they started to show symptoms and will now be treated by local healthcare authorities.
"The team has prepared for this eventuality and has ongoing support in place for its employee who will now enter a period of quarantine."
Overnight, the BBC and Sky Television Association reported the race would be stopped after a crisis meeting between F1 hierarchy.
A number of team owners were reportedly unhappy to continue the event.
There has been no official confirmation from F1 or the sport's governing body, the FIA.
On Thursday, six-time F1 champion Lewis Hamilton said he found it "shocking" that the race was being staged amid a global coronavirus pandemic.
"I am really very, very surprised that we are here," the Mercedes star said.
"For me it is shocking that we are all sitting in this (press conference) room.
"It seems like the rest of the world is reacting ... Formula One continues to go on - it's definitely concerning for me."
