Victoria's troubled regional rail network V/Line will get a $1.45 billion upgrade, with improvements across all lines, as part of the State Government's upcoming budget.

Key points: Regional rail in Victoria will receive a $1.45 billion funding boost

Regional rail in Victoria will receive a $1.45 billion funding boost Gippsland, with the state's "worst" rail service will receive the largest proportion

Gippsland, with the state's "worst" rail service will receive the largest proportion The PTUA says the funding will help the network catch up with higher patronage

The package includes $435 million for the Gippsland line, improvements to the Warrnambool, Echuca, Bendigo and Ballarat services, and $110 million for the new Surf Coast rail project to Torquay.

"[It] will see upgrades on every single regional line across Victoria, it's the next step of our regional rail revival, investing in the public transport that regional Victorians deserve and can rely on," Victorian Public Transport Minister Jacinta Allan said.

Last year, the service was plagued with problems, including faulty boom gates and unrelated wheel issues, causing a period of mass cancellations, bus replacements and free travel for commuters, leading to high-level resignations.

Local councils and the Gippsland V/Line User's Group have also been lobbying for improvements to their local line, arguing the region has the slowest and most unreliable passenger train service in the Victoria.

Regional rail funding includes: Gippsland line: $435 million

$435 million Warrnambool line (Barwon South West region): $200 million

$200 million Surf Coast rail line: $110 million

$110 million Bendigo/Echuca line: $91 million

$91 million Ballarat/Ararat/Maryborough line: $39 million

Despite the ongoing issues, the state's regional rail service has experienced a boom in passenger numbers.

Ms Allan said for the month of March V/Line carried 1.9 million trips, more than it has ever carried before.

"That is putting additional pressure on the network and this … is about investing in improving tracks, improving signalling [and] undertaking big infrastructure projects."

The announcement was welcomed by the Public Transport Users Association's Paul Westcott, who said the system was "groaning under its own success".

"There's been a problem with catching up with the, unexpected in some cases, increase in patronage and also catching up with the dearth of expenditure on regional rail up until the last couple of decades," he said.

"For many, many decades before that the rail system was in decline."

But he said it was still unclear when the benefits of the funding would actually be seen by commuters on the ground.

Gippsland's V/Line service has been allocated the largest proportion of the new funding. ( ABC Gippsland )

"What passengers would be interested to see is the actual time line for the delivery of some of these projects," he said.

"It's one thing to announce the money that's projected to be spent on them, but it's another thing to actually see the effects of this spending … we still need the detail as far as that's concerned."

Ms Allan said a number of the projects were "ready to go".

"We've got shovel-ready programs, the works as part of stage one on the Ballarat line can commence in early 2018, the works on the Gippsland line can commence in 2018," she said.

"We can get many of the elements of this project out to tender straight away because we've done the detailed planning work, we've done the business case work."

She said up to 1,000 jobs are expected to be created during construction.

Regional rail promise a 'Santa wish-list'

Ms Allan said the package would be funded by money the Commonwealth owes Victoria from the Asset Recycling Fund, following the privatisation of the Port of Melbourne.

Victoria believes it is entitled to a 15 per cent bonus — $1.45 billion — on the $9.7 billion long-term lease.

"This is funding that should come to Victoria, and needs to come to Victoria, we would expect that the Federal Liberal Government would support this package," she said.

Federal Infrastructure and Transport Minister and Gippsland MP Darren Chester repeated the Commonwealth's assertion that the Victorian Government had missed the deadline to receive asset recycling funds.

"What we've seen today, basically, is Premier [Daniel] Andrews has written a Santa wish-list to the Prime Minister without any money of his own on the table, without any planning, without a business case," he said.

"We'll need to see the State Government step up some funds at their budget on Tuesday night and make a real commitment to regional rail."

He said he was "ready to do a deal" with Victoria on regional rail, once the Federal Government had seen a business case.

Earlier this month, Prime Minister Malcolm Turnbull threw his support behind a Melbourne Airport rail link, while the Victorian Government maintained that the money should be spent on regional rail projects.

Ms Allan said the up-coming budget would include $10 million to develop a plan for the airport link.