Lockdown measures originally set to end on Monday would not be eased until daily reported cases fell below 4,000, the state news agency reported on Sunday, citing Muhyiddin.
On Monday, Malaysia reported 5,218 new infections, bringing total cases to 739,266, including 5,001 deaths.
The latest aid package includes a fiscal injection of 10 billion ringgit from the government, Muhyiddin said in a televised address on Monday.
"What I can promise today is that, even within a narrow fiscal space... I will not compromise in the effort to protect the people's welfare and to fight COVID-19," he said.
The government will allocate an additional 3.8 billion ringgit for a wage subsidy programme, and roll out more cash aid, loan moratoriums, tax breaks, grants, subsidies and other measures, Muhyiddin said.
The Southeast Asian nation would also spend an additional 1 billion ringgit to ramp up its inoculation programme, including 400 million ringgit to buy more vaccines, he added.
The funds would ensure 130% of the country's 32 million population would be covered and would extend vaccinations to youths aged 12 to 18.
In addition to lower infection numbers, the government has said lockdown measures would only be eased when the country reached specific targets in vaccination rates and healthcare capacity.
As of Saturday, around 15.5% of the population have received at least one dose of a COVID-19 vaccine, while 6% have received two doses, Muhyiddin said.
($1 = 4.1410 ringgit)
This story refiles to add dropped letter in word "extend" in paragraph 8.
(Reporting by Rozanna Latiff and Mei Mei Chu; Editing by Martin Petty)
