Federation Square East development announced for Melbourne CBD

Melbourne's Federation Square could be expanded over neighbouring railyards.

The state government is seeking expressions of interest to develop public land that is now part of the rail corridor for a Federation Square East.

Premier Denis Napthine said the site could support a new mixed-use development to include public space overlooking the Yarra River, shops, restaurants, bars and apartments.

It would also link several of the city's iconic sites including Federation Square, the MCG, Melbourne Park, the botanic gardens and the Arts Centre.

"Concepts should respect and enhance the Federation Square, Birrarung Marr and the north bank of the river and ensure they will not be adversely affected," Dr Napthine told reporters.

Deputy Premier Peter Ryan said any development on the site would have to comply with guidelines for the height of buildings, and improving access from the CBD to the Yarra River.

"There is guidance around the built form which shows the development has to have a flow about it," Mr Ryan said.

"Those areas that are likely to have more height should be in the northeastern segment of the site."

Capital city zoning means there cannot be any overshadowing of the river.

The formal expression of interest document will be released on September 15.