Western Australia and Queensland have resisted plans to ensure all Australian borders are open by Christmas, after a spectacular split in national cabinet on Friday.
Prime Minister Scott Morrison announced after Friday's meeting national cabinet would no longer be run on a consensus basis, after Western Australia refused to back the Commonwealth's definition of a coronavirus hotspot.
However Queensland premier Annastacia Palaszczuk later revealed she had sided with Western Australia and also refused to back the proposal.
Mr Morrison said for national cabinet to continue to work, it needed to evolve.
"One of the reasons COAG and its predecessors never worked was there was the unrealistic and, frankly, not very practical expectation that it could only ever operate on complete, 100 per cent consensus. That sets the federation up to fail," Mr Morrison said.
"Australia is too diverse a place. The challenges are too disparate to think that, on every single issue, every state and territory is going to come to exactly the same point. That is not a realistic expectation.
"Not everyone has to get on the bus for the bus to leave the station. But it is important the bus leaves the station."
Western Australia Premier Mark McGowan said in a statement he would only open his state's order when their health advice recommended it.
"WA has always avoided setting an arbitrary deadline on borders. A date will be set, when our health advice recommends it, but that might be some time away," Mr McGowan said.
"We went through this before, and then Victoria's outbreak happened. Opening and closing just causes more confusion and isn't a good outcome for our local economy."
Mr McGowan said there was no economic rationale for Western Australia to reopen.
"Unlike the rest of the country, WA is not currently in a recession. We are the engine room of the national economy. So we won't prematurely re-open borders," he said.
"If we went too soon, it could be deadly and there would be economic devastation. That would result in the reintroduction of restrictions, and possibly mean reintroducing the hard border."
All other states and territories agreed to work towards a model where people who were from COVID-free areas would be able to travel more freely.
Under the definition developed by the expert medical panel, a metropolitan area which recorded three straight days of 10 cases of community transmission - 30 cases in total - would be declared a COVID-19 hotspot.
For a rural and regional area, the trigger would be three locally acquired cases per day over three days - a total of nine cases.
However the ACT has raised concerns about this definition already. Chief Minister Andrew Barr said on Friday the metropolitan definition was a "high trigger point" for the territory, given the epidemiology and size of the city. The rural definition did not fit easily either, Mr Barr said.
The hotspot plan would also hinge on making passenger manifests available to track people moving across the country, as well as sewerage testing to monitor any potential outbreaks of the virus.
"This will take some time to get that right. But the idea of ultimately moving beyond a situation where you have hard borders, but you move to a situation where you can have a workable hot spot concept, then that is something we are going to give it our best possible go to define and to make work," Mr Morrison said.
Mr Morrison said the hotspot model could even be extended to New Zealand, to allow tourism between the two countries to start again.
It could also free up more spaces in hotel quarantine, he said.
"The idea that New Zealanders would not have to go into quarantine because they're coming from COVID-free areas would also free up places in quarantine," Mr Morrison said.
"Equally, if states aren't requiring Australians coming from areas where there is no COVID cases, like the ACT, and that they don't have to go into hotel quarantine in places, well, that obviously frees up more capacity as well."
Only five of eight states and territories also agreed to the agricultural code, which would allow farm and seasonal workers to move more freely across borders.
Queensland, Western Australia and Tasmania rejected the code.
There's been a growing chasm in the national cabinet over border closures, as the federal government attempts to pressure states to reopen in order to lessen the economic impacts of the virus.
Queensland and Western Australia had indicated they would reject any attempts to interfere with the management of the borders, as the Prime Minister was attempting to institute a shared definition of what constitutes a coronavirus hotspot.
Ms Palaszczuk told media before national cabinet she believed the state had been unfairly singled out, particular over its admission of AFL executives over the border.
"I think it's a bit disingenuous for this heightened criticism that is coming from a whole lot of levels when our fundamental concern is to look after Queenslanders and to make sure that they are safe during this time," Ms Palaszczuk said.
"I do not want to see what has happened in our aged care sector in NSW and in Victoria happen here in Queensland. That would be a nightmare. These are people's families. They are their uncles, their aunts, their mothers, their fathers, their grandparents. I don't want to see that here and Queenslanders don't want to see that here."