Three people died when a major wind storm hit the state capital overnight.

A man, a woman and a four-year-old boy have been killed by falling trees in separate incidents, after wild winds swept across parts of Victoria state in eastern Australia.

The deaths came during a night of intense storms that moved in from the southwest over Melbourne and into Victoria from Thursday afternoon into the evening.

The Australia Bureau of Meteorology senior meteorologist, Dean Narromore, told reporters winds of 158 kilometres per hour (98 miles per hour) - equivalent to a Category 2 cyclone - were recorded at Wilsons Promontory, while gusts of 124 km/h (77mph) were recorded at Mount Gellibrand.

The areas hardest hit included Colac, Torquay, and Melbourne's east including Belgrave, Mooroolbark, Croydon and Montrose, as well as Phillip Island and Warragul.

The State Emergency Service (SES) received nearly 3,000 calls overnight with almost 2,000 in a 15-minute period at around 6pm local time.

Tim Wiebusch, SES's chief officer, reported more than 300 buildings were severely damaged across the state and more than 120,000 homes lost power.

Almost 40,000 homes remained without power on Friday afternoon.

The Silvan Dam water treatment plant lost power during the storms and hundreds of thousands of households across Melbourne's north and east have been told to boil their water, as the electrical damage resulted in contamination.

Victoria Premier Daniel Andrews spoke to reporters saying: "Yarra Valley Water's issued a precautionary boil water notice. That advisory is very, very important, we don't want people getting sick from potentially consuming water that hasn't been through that treatment plant properly."

Recovery efforts have been hindered because of a strict COVID-19 lockdown in the region, and special exemptions to the rules were released for those affected by the storm.

COVID-19 restrictions also meant a majority of Melbourne's workforce is working from home, where thousands of people were left without power until Friday evening, according to local media.