Police are searching for a man who bashed and sexually assaulted a woman in a Melbourne laneway.

The attacker followed the 23-year-old victim from King Street in the CBD to North Melbourne in the early hours of Sunday morning.

After the victim rejected the man's advances, he dragged her into a laneway where he punched and kicked her repeatedly in the face before sexually assaulting her.

Fortunately somebody heard the woman's cries for help and intervened.

The attacker then stole the woman's handbag and ran off.

Detective Senior Constable Brett Sniegowski says the victim is recovering in hospital, where she is in a stable condition with facial injuries.

"When we investigate this incident it's actually a frightening attack to consider - the injuries, the open attack in an open area - it's concerning," he said.

Police are checking CCTV footage and want to hear from anyone who may have seen the man.

Anyone with information is encouraged to contact Crime Stoppers on 1800 333 000.