NHS Grampian warned Moray is now seeing “uncontrolled, sustained community transmission” of the virus, and an incident management team (IMT) has been set up in an effort to halt the spread.
Elgin is the epicentre of the spread, but NHS Grampian warned cases are rising in surrounding areas, including Lossiemouth, Buckie and Keith.
IMT chairman and deputy director of Public Health at NHS Grampian Chris Littlejohn said: “In Moray we are now seeing uncontrolled, sustained community transmission, current restrictions not are containing it, and the situation is rapidly deteriorating.
"We are seeing hospitalisations from this – including in the under 50s – and we will see deaths, if the situation is not brought under control.”
It comes after health chiefs warned locals to “self-isolate or be isolated” on Wednesday, after reports of locals not adhering to Covid-19 advice.
Moray currently has the highest rates of Covid in the country, at around 81 cases per 100,000 people, double the next highest rate in East Dumbartonshire.
There have now been 51 cases linked to Elgin Academy, with around a quarter of the 1,000 pupils told to self-isolate.
It is understood that these cases are linked to community transmission, rather than a single outbreak at the school.
Chris Littlejohn added: “We are writing to businesses encouraging them to support us in getting the workforce tested, we are deploying extra mobile testing units and we are continuing with our enhanced testing in the region.
“As a next step we are heavily considering door-to-door testing in Elgin and look at how we can facilitate that.”
“Since April 10 we have seen 210 cases in Moray. More than half of those have come in the last eight days alone. This is a rapidly accelerating situation.
“Test positivity in Moray is at 3.2 per cent - across Scotland that figure is close to just 1 per cent - and the R-rate in Moray is at 1.8, so every person in Moray that becomes infected is, on average, passing it on to two other people.”