The Port of Melbourne privatisation is facing a tough national security hurdle, with the federal government set to gain new powers potentially allowing it to bar foreign bidders.

The news calls into question the windfall the Andrew government hopes to gain from the port sale, a projected war chest of at least $7 billion that the government has earmarked to pay for its ambitious project to replace 50 level crossings across Melbourne.

The new owners of a 50-year lease over Australia's busiest port, the Port of Melbourne, plan to put in a place a business plan to bolster productivity. Credit:Paul Rovere

Foreign governments wanting to buy state infrastructure are automatically scrutinised by Australia's Foreign Investment Review Board, private foreign companies are exempt.

But Treasurer Scott Morrison has confirmed the government plans to dump the exemption for foreign companies wanting a stake in state-owned "critical infrastructure" in the near future.