The first six people have been infected with the coronavirus in Italy, all in Lombardy, regional health councillor Giulio Gallera said Friday.
Gallera urged people to stay at home and avoid social contact.
He said some 250 people had been placed in isolation and would be tested for the deadly virus.
Welfare official Maria Gramegna said authorities were trying to establish whether the second batch of three cases were linked to an initial trio in Lodi.
"We are investigating," she said, "they are three people who presented with a clinical picture of pneumonia at the hospital at Codogno, we're trying to understand if there were contacts with the first three cases".
Giuseppe Ippolito, scientific director of Italy's top infectious disease hospital, the Spallanzani in Rome, said "the cases reported in Lombardy are the first registered on Italian territory and make us enter a new phase.
"For the first time we have moved from cases of importation to cases of local circulation of the virus".
The first case is a man, 38, who is believed to have got the virus after dining with a friend who had come back from China.
The other two initially infected people are the 38-year-old's wife, a pregnant teacher, who has also been admitted to the Codogno hospital, and a third person who went to hospital suffering symptoms of pneumonia after having had contact with the 38-year-old.
The teacher had not been in contact with children.
The 38-year-old man has been admitted to the intensive care ward of a hospital at Codogno near Lodi in northern Italy.
He was said to be in a serious condition, with respiratory insufficiency - but Galera said his condition had "improved slightly" since Thursday night, when he was admitted.
The man went to the emergency room of the hospital on Thursday.
Police have reconstructed his movements over the last four days, when he went running and to work, played football and took part in three dinners.
The man works for a multinational based in Casalpusterlengo, which has been isolated along with Lodi.
The police are also trying to reconstruct what his wife did, and whom she met, over the last few days.
She is believed to have had fewer contacts than him.
The friend with whom he dined, meanwhile, has been taken to Milan's Sacco Hospital.
He is in isolation there. Gallera, the regional health councillor, said he was "well".
The man's family members have been placed in isolation, sources said.
Health Minister Roberto Speranza ordered obligatory quarantine for the 60 people who have been in contact with the man.
Speranza travelled to Lombardy.
Premier Giuseppe Conte also stressed that quarantine had been ordered as a necessary precaution and said "we are keeping the precautionary line high".
He warned against "social alarmism and panic".
Lombardy welfare councilor Giulio Gallera urged all residents of Codogno and nearby Castiglione d'Adda to stay at home as a precautionary measure and avoid all social contact.
The local health agency in Piacenza, near where the friend who got back from China works at Fiorenzuola d'Arda, ordered checks on local employees of the same company.
The mayor of Fiorenzuola ordered tests on the employees at the friend's factory.
The factory, which makes equipment for making synthetic fibres and polymers for construction, has been closed Friday as a precaution. Authorities are weighing the use of military facilities for quarantine purposes.
In Lodi the first masks were being distributed amid coronavirus fears.
World Health Organization official Walter Ricciardi said the case of an infection in Italy had been forecast for months and now "sangfroid" was needed.
Meanwhile the first 20 of 55 Italians who returned from Wuhan February 3 have now left quarantine at the Cecchignola military complex outside Rome.
There have been the first two deaths and 13 new infections, making a total of 634, on the Diamond Princess cruise ship off Japan.
Some 30 of 35 Italians on board the ship are returning to Rome on a military plane along with 27 Europeans.
The other five, crew and the captain, have stayed on board.
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