"It is an ideas generating process. We are not ruling anything in, or ruling anything out. We are asking industry to come to us with their ideas for that. We don't pretend to have all the ideas and they have got some bright minds out there," Mr Hodgett said.

He said the government would be mindful of the need to maintain public space and "civic need" and that they did not want a repeat of the old Gas and Fuel buildings.

"It is a difficult site, when you go over railway yards it is expensive and difficult so you have to get something that is viable," he said.

Shadow Planning Minister Brian Tee said planning laws were there to protect Melbourne's most iconic sites for future generations.

"Whether it is the Yarra or the Cathedral the Napthine government won't let anything stand in the way of developers making a profit when it comes to Federation Square," Mr Tee said.