A first system-wide "code brown" declaration was enacted in Melbourne hospitals and six regional ones last week, with experts forecasting up to 2500 virus patients by early February.
It was slated to last four to six weeks, although would be constantly reviewed.
Since then, Victorian health services deputy controller Adam Horsburgh said there had been a drop in triple-zero calls and emergency presentations.
The number of healthcare staff forced into the isolation as confirmed COVID-19 cases or close contacts has also fallen from more than 4000, to about 3500 on any given day.
The easing shortage is attributed to the increased availability of rapid tests to release workers from isolation and more staff serving their seven-day quarantine period than beginning it.
"While the number of admissions and staff availability have either remained stable or improved slightly over the past seven days, the system is still under enormous strain," Mr Horsburgh, who is also Austin Health chief executive, told reporters on Tuesday.
"Therefore, we do think that the code brown setting is still the appropriate response at this point in time."
One in five calls to triple zero are still not for emergencies and Mr Horsburgh said many people with COVID often ring or attend hospitals because they don't know how to access advice or support.
To help more Victorians with mild COVID-19 symptoms recover from home, the state government is launching a new advertising campaign to run on TV, radio and social media platforms.
"For those who are experiencing severe symptoms, the campaign explains what to look for," Health Minister Martin Foley said.
Victoria's hospital patient numbers jumped by 59 to 1057 on Tuesday, after falling slightly in recent days. There remain 119 people in intensive care, with 45 of those on a ventilator.
It comes after Victoria recorded its highest daily COVID-19 death toll since its second wave.
The state reported 29 virus-related deaths and 14,836 new cases, including 6297 from PCR tests and 8539 from rapid antigen tests.
Mr Foley said 12 of the fatalities were people who died in the previous two days.
The deaths are the highest confirmed in a single day since September 4, 2020, when Victoria posted 59 fatalities amid Melbourne's 112-day lockdown.
The grim result came two years to the day since the first case of COVID-19, then known as the novel coronavirus, was announced in Australia.
The infection was found in a man who flew to Melbourne from Wuhan, the epicentre of the outbreak, about a week earlier.
There have since been more than 775,000 infections reported in Victoria, roughly 550,000 of which have come in the past three weeks as the Omicron variant runs rampant.
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