Work will begin within weeks on an elevated rail line in Melbourne's south-east after contracts for the work were signed today.

The controversial $1.6 billion so-called "sky rail" project will remove nine level crossings between Caulfield and Dandenong, by building a 10-metre high elevated rail line.

The proposal has angered some local residents, with a backlash against the project by property owners whose houses will back onto the elevated rail tracks.

But Public Transport Minister Jacinta Allan said the project was pushing ahead, with early works to start within weeks.

"This project is on schedule to be completed towards the end of 2018 which is in line with what we indicated when we first announced this approach back in early February, but it is a tight schedule and we really do need to push on," she said.

Those most directly affected will be able to sell their homes to the Government.

Ms Allan said it was too early to say how many homeowners were likely to apply for a voluntary acquisition.

"Since the announcement of the voluntary purchase program a few weeks ago there has been a number of people contact the level crossing, removal authority to have those private one on one discussions," she said.

The project will be carried out by a group of companies, including Metro Trains and LendLease.