The Victorian Government will commit $1.4 billion towards a tunnel alternative to the Westgate Bridge, after the Federal Government ruled out making a contribution to the project.

The Western Distributor will connect the Westgate Freeway to CityLink, via a tolled tunnel under Yarraville.

The original funding model did not include a State Government contribution, and instead proposed it be paid for by an increase in tolling revenue and a contribution from the Federal Government.

But Premier Daniel Andrews said the state would step in and fund the Commonwealth's share, after Prime Minister Malcolm Turnbull ruled out Canberra contributing funding last week.

"The Prime Minister made it very clear last week that this is not a project that he is interested in," Mr Andrews said.

He said an offer from the Federal Government to give Victoria a "loan" for the project did not make sense.

"We're a triple-A rated economy and I'm not going to be waiting, hanging out for Malcolm Turnbull to borrow money to then re-lend it to us," he said.

"We're not doing that."

Federal Major Projects Minister Paul Fletcher said Victoria's decision to fund the road itself vindicated the Federal Government's decision not to get involved.

"Because the project can be funded from toll revenues then it's really not a project that's appropriate or requiring a Commonwealth grant," Mr Fletcher said.

"So the decision that the Victorian Government has made today ... is a confirmation of the decision the Commonwealth has taken."

Debt won't be increased to pay for road: Premier

The money will be spent over four years and will start to flow from this month's State budget.

Mr Andrews said there would be no increase in the state's 2014 debt levels to pay for the road.

"We will not at any point across our forward estimates exceed the level of borrowing as a percentage of the overall economy that was left to us by the previous government," he said

"When the budget is delivered, the Treasurer will bring down a set of accounts that sees net debt no greater than it was when we were sworn in."

Toll road operator Transurban will claw back the money it will invest in the project through an extension of the tolling period on CityLink.

Opposition Leader Matthew Guy said it was unfair that motorists who may never use the road would pay for it through a longer toll period.

"It is completely unfair to expect that motorists from the eastern and south eastern suburbs are going to be slugged with tolls for a decade or more that, they may never use it the western suburbs," he said.

It is expected the tolling period will be extended by about 10 years.

Western Distributor proposal showing the second river crossing ( Supplied: Victorian Government )

'We will provide the community with options'

The proposed road includes several different designs, which will be put to the local community and go through an environmental assessment process.

One proposal would see a longer tunnel running off the Westgate Freeway, to minimise the impact on public open space on Hyde Street in Yarraville.

The tunnel would connect to Footscray Road, where a double-decker elevated freeway would then run to CityLink, with exits providing access to the city.

"We've been consulting the community for over a year now, and all the feedback has been really positive about the project and what it's trying to achieve," Transurban's Scott Charlton said.

"We're providing options so the community can come back with what they'd prefer and we can address those detailed issues.

"The process will run for another year, it will be one of the longest consultations processes we've seen in the infrastructure industry."