We won't build South Yarra station: Pallas

Victoria won't build a new station in South Yarra despite a federal push to get it included in the $11 billion Melbourne Metro Rail project.

Treasurer Tim Pallas ruled out adding the station to the project, which Victoria has funded without federal help.

"We won't be building a station at South Yarra. Simply because it doesn't stack up," Mr Pallas told reporters on Tuesday.

"We've released the business case, it indicates that South Yarra is about a 10 cent return in every dollar invested."

Victoria is due $1.46 billion in top-up funds for the sale of the Melbourne port lease, but Canberra has so far only offered $877 million to go towards the Metro Rail.

The federal government was reportedly prepared to offer the extra $600 million, but only if it went towards a South Yarra station.

Local Liberal MP and federal assistant Treasurer Kelly O'Dwyer has argued for the station, which is predicted to cost up to $1 billion, to be included as part of the Metro Rail project.

But federal Infrastructure Minister Darren Chester said it wasn't on the table.

"She wouldn't be doing her job as a local member of parliament if she didn't advocate for a local project," Mr Chester told ABC radio.

Instead, Mr Chester said he wanted to reach an agreement over the $877 million set aside for Victoria.

Opposition leader Matthew Guy said South Yarra needed a major upgrade, and local Greens MP Sam Hibbins agreed the people want it.

"This project has the overwhelming support of the South Yarra community," Mr Hibbins said.