Car insurance, registration and myki fees should be replaced with a pay-as-you-go system in a major shake-up of transport pricing aimed at easing peak-hour congestion on roads and railways.

Infrastructure Victoria is calling for a network pricing scheme that would see all commuters – no matter their mode of transport – pay for the distance they travel, with a premium added to peak hour trips.

Melbourne's traffic Credit:Luis Enrique Ascui

This model would remove 168,000 cars from the state's roads and improve travel speeds by 25 per cent, while making transport cheaper for up to 85 per cent of Victorians, new research shows.

"Victoria’s transport network is struggling to meet demand, with congested roads and crowded public transport," the paper released on Wednesday warned.