Taxpayer-funded political propaganda is set to be banned and the state's financial watchdog will be given the authority to ensure government departments comply with the tougher rules.

In a long-awaited move that could save Victorians millions of dollars every year, the Andrews government will introduce laws to crack down on government advertising, which cost the state more than $655 million between 2008 to 2014, according to official department figures.

A scene from the Napthine government's Moving Victoria campaign.

Under the changes, the government will introduce new guidelines that prohibit party-political advertising paid for by taxpayers, limiting campaigns to those that are recruitment based or serve an educational or functional purpose, such as bushfire awareness campaigns or TAC road safety ads.

The threshold for advertising that is subject to central oversight and approval will also be lowered – from $150,000 to $100,000 – and the Auditor-General will get beefed-up powers to ensure all state departments and agencies adhere by the rules.