Chile on Monday lifted strict coronavirus lockdown measures for millions of people in the capital Santiago, a month ahead of a key referendum to amend the dictatorship-era constitution.

Most of the capital's seven million population moved to phase three of a five-step deconfinement plan, allowing the reopening of bars and restaurants as well as regional transport links.

However, fears are widespread that a new outbreak in infections could drive parts of the capital back into confinement. "It's like I agree and don't agree at the same time," said Gabriela Flores, a 21-year-old student in Puente Alto, Santiago's most populous district.

"What's happening now is that they are acting as if nothing happened. What they want to do is to increase trade and get back to work so they don't have to worry about people." The relaxation of the confinement measures comes as the country prepares for the October 25 referendum to decide whether to change the constitution established under the military rule of General Augusto Pinochet (1973-90). 

Chile is one of the worst-affected countries in Latin America by the coronavirus, with nearly half a million infections and more than 12,000 confirmed Covid-19 deaths.

Around two million people have lost their jobs since the lockdown began in March, and the Central Bank expects the economy to shrink by 7.5 per cent in 2020.

Johanna Medina, 38, said authorities were ending the lockdown too early: "They shouldn't release us from quarantine." Others, like building caretaker Sergio Silva, 60, welcomed Santiago citizens' newly rediscovered freedom. "It's good for everything, for the state of mind of the people. It was a very complicated time," Silva told AFP.

Schools and universities remain closed, with pupils attending classes virtually over the internet. Most companies are encouraging their employees to work from home.

Chile's borders remain closed to tourists and non-residents, and nighttime curfews are still in place to prevent the spread of the virus. As the city reopened, Undersecretary for Health, Paula Daza, urged residents of Santiago to "maintain the Covid life" with frequent hand-washing, social distancing and the use of masks.

Authorities continue to be concerned about the high levels of infection in the Magellan region in the south of the country, which has been experiencing a resurgence of the disease in recent weeks.