Everyone working or living in Merthyr Tydfil will be offered a Covid test from Saturday.
Two more areas have been put under “close watch” as coronavirus cases in Wales rise.
Infection rates have risen from 20 per 100,000 people to 35 per 100,000 in the past week, First Minister Mark Drakeford said.
He also said the “developing situation” in Newport and Merthyr Tydfil was being kept under “close watch”.
Currently, restrictions are in place for people living in Caerphilly county and Rhondda Cynon Taf (RCT).
In terms of cases in the UK, Caerphilly is 6th, RCT is 13th, Newport is 35th and Merthyr Tydfil 36th.
Strict new rules came into force on Thursday evening for RCT residents after a spike in Covid-19 cases there.
Its 240,000 residents are not be able to enter or leave the county without a reasonable excuse.
Health officials say hospital admissions will increase further if people ignore the latest restrictions.
The local authority became the second council area to enter a local lockdown in Wales, following Caerphilly last week.
“It’s a very rapidly changing picture,” said Dr Kelechi Nnoaham, director of public health at Cwm Taf Morgannwg University Health Board, which covers Rhondda Cynon Taf (RCT), Merthyr Tydfil and Bridgend.
“At this time last week, we really didn’t have any significant cases in the hospital, but that’s changed.”
He said they were now dealing with a “handful” of cases.
“We always knew that once community transmission got sustained, we will begin to pick up cases in the hospital,” he told BBC Radio Wales’ Breakfast programme.
“So it’s exactly what we expected. It’s probably going to increase in the hospital now if we do not to take additional measures, but we are doing so at this point.”
Health officials said the initial wave of infections appears to have been in younger people.
“But it’s only a matter of time before it seeps into the older population, who are more likely to be vulnerable, who are more likely to become ill if they do get it, and therefore end up in hospital,” added Dr Nnoaham.
Public Health Wales warned on Thursday that “there may be more deaths in the coming days” with both RCT and Caerphilly county in local lockdowns.
Figures released on Thursday revealed more than half of all Covid-19 hospital admissions in Wales were in the Aneurin Bevan health board area, which covers Caerphilly and Newport, and Cwm Taf Morgannwg.
Wales’ Health Minister Vaughan Gething said there had been a “rapid” rise in cases in RCT, with 82.1 infections per 100,000 people over the past seven days.
The latest equivalent figure across Wales was 21.4 per 100,000.
Wednesday’s rate of positive tests for the past week in RCT was 5.1% – the highest in Wales. Mr Gething previously warned a positive rate of 4% across Wales would trigger a national lockdown.
The Wales average is 2.4%.
Merthyr Tydfil could be the next area in Wales to see a local lockdown, according to a health data expert.
The former head of health analysis at the Office for National Statistics highlighted the rising proportion of positive coronavirus tests in the area.
In the past seven days, 6% of tests in and around Merthyr were positive.
That is more than the 5.1% in Caerphilly, which has gone into lockdown, and almost double the 3.2% in Rhondda Cynon Taff.
Rhondda MP Chris Bryant has warned a local lockdown could be enforced in the area “by the weekend” if cases continued to rise.
But data expert Jamie Jenkins said: “If you look at the data across the whole of Wales, Merthyr Tydfil would be the one you would be more concerned about rather than Rhondda Cynon Taff.”
Mr Jenkins said fewer people were talking Merthyr than Rhondda Cynon Taff “because the numbers are smaller but the local authority of Merthyr is much smaller.”
He added: “But if we’re looking at where the next risk of a local lockdown is going to be, it’s probably Merthyr above [RCT], if they apply the same principle of looking at the stats.”
Merthyr Tydfil council has been asked to comment.
The number of positive tests across Wales was also “a concern”, said Mr Jenkins, with the proportion more than doubling, from 1% to 2.5% in the space of the past four weeks.
The case rate – the proportion of cases for the size of its population – is now 51.4 per 100,000 – which is 31 cases in the past seven days.
It has the highest case rate total after Caerphilly, which is 83.4 per 100,000.
Cases per 100,000 people over the last seven days
The rate in Rhondda Cynon Taff is 41.4, in Powys 21.9 and in Wrexham it is 20.6.
Public Health Wales is investigating a small number of cases at a factory in Merthyr.
More than 250 people work at the General Dynamics plant, which assembles armoured vehicles for the Army.
The Welsh Government felt it had little option but to introduce a local lockdown in Caerphilly county, because of a dramatic rise in the coronavirus case rate – the proportion of cases to the population.
Not quite as startling, but still significant, has been the case rate rises in Rhondda Cynon Taff and Merthyr Tydfil.
But public health experts won’t just be looking at those figures, they are also looking at how many tests are coming back positive.
% of positive Covid-19 tests by area in last seven days
The average in Wales over the last week has been 2.5%, but in Caerphilly it’s more than double that – 5.1%
In RCT currently, about three tests in every 100 come back positive. That’s actually that’s lower than Newport.
But if we look at Merthyr Tydfil, 6% of tests are coming back positive, so no wonder alarm bells are ringing.
I believe if that was replicated across Wales, we might be back to a blanket lockdown.
As it stands, it seems almost inevitable there will be more restrictions as time goes on.
But they might be different, depending on local circumstances.
The message health officials are trying to stress at the moment is, wherever you live, is if you want to avoid a form of local lockdown, be careful, observe social distancing and take the coronavirus risk seriously.
Visits to care homes in the county have already been stopped, while six supermarkets have been given improvement orders after checks by public health officials found they were not adhering to coronavirus regulations.
They are Tesco in Talbot Green, Aldi and Morrison’s in Porth, Lidl in Aberdare, Iceland in Taff Street, Pontypridd, and Co-op in Ynysybwl.
They have 48 hours to correct the issues highlighted or they could face further action, including closure.
There have been warnings over social distancing due to small clusters around Porth, Penygraig and Tonypandy.
The spread of Covid-19 here has so far been of a different nature to the infections in Caerphilly, where there has been community transmission.
Council leader Andrew Morgan said there were just days to “get on top” of rising infections and a temporary testing centre has opened in Porth.
Mr Morgan also announced pubs would be inspected in a similar way to check they were complying with legislation.
“We don’t want to see pubs having to close early or be closed altogether,” he said.
Mr Bryant also said he feared a lockdown could be imminent: “If we carry on as we are then there will be a lockdown, perhaps by the weekend, because a small minority of people are being fundamentally irresponsible.
“They are refusing to isolate when they come home from holiday, refusing to be tested when they are showing symptoms, going to caravan sites in groups of six, seven, eight families together, holding parties in houses, giving false names to pubs so they can’t be traced.
“The truth is that we are all in this together. Some people think they and the people they love are magically immune but if we don’t take this seriously there will be a major lockdown, which will affect people’s livelihoods and finances.”