In a press conference, Prime Minister Giuseppe Conte announced “extraordinary measures” to tackle the spread of the disease.
The measures were imposed after the first two deaths were recorded in northern Lombardy and Veneto areas of the country.
A 77-year-old woman died on Saturday near Codogno in Lombardy a day after a 78-year-old retired bricklayer also died of the virus in Veneto.
Two Chinese tourists were the first to contract the virus and they were quarantined in Rome.
Another man, who was also held at the same hospital in Rome, has since recovered from the disease, according to the authorities.
As of Sunday morning, the number of confirmed cases rose from 54 a day earlier to 89 in Lombardy (with two in Milan) 16 in Veneto, three in Piedmont (including two in Turin) and two in Emilia-Romagna.
“The contagiousness of this virus is very strong and pretty virulent,” Giulio Gallera, Lombardy’s health chief, said.
He added that health authorities had identified “patient number one”, a 38-year-old man in intensive care in Codogno.
About 11 towns in Italy’s north have been placed under quarantine.
Conte said it would now be forbidden to enter or leave the outbreak areas, unless special permission was granted.
All school, sporting and social activities have been suspended in those areas.
The PM, however, asked Italians “not to give in to feelings of panic”.
The virus has killed at least 2,224 people, with 76,775 confirmed cases and spread to about 28 countries in the world.
WHO had declared the outbreak a global health emergency in January, appealing for $675 million to fund a three-month response plan.
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