Following the Coalition's decision to block the sale of the Port of Melbourne, Labor has threatened to bypass Parliament and sell the port without its approval.

Treasurer Tim Pallas said on Tuesday he would not rule out using powers granted to the Treasurer under the State Owned Enterprises Act, set up by Kennett government treasurer Alan Stockdale, to sell the port if the Coalition proceeded with its threat.

"Our preference is to get this done in a co-operative way with the Parliament," Mr Pallas said. "But we are not in the business of allowing the opposition to create uncertainty and conjecture about whether or not promises will be honoured."

The Coalition could blow a $5 billion to $7 billion hole in the budget by opposing the sale of the Port of Melbourne.