The Coalition government has revealed plans to reallocate $1.5bn earmarked for Melbourne’s East West Link towards other road projects in Victoria, not metropolitan rail as the Labor state government had advocated.

The federal government proposes to spend $500m on the Monash Freeway, $350m to upgrade the M80 ring road and $220m on the Murray basin rail project.

Malcolm Turnbull has written to Victoria’s premier, Daniel Andrews, calling on the state government to match the spending dollar for dollar.

On Friday he told 3AW the $1.5bn should be “put to work to ease congestion” by starting the upgrades next year. The road projects had been identified as priorities by Infrastructure Australia, the prime minister said: “There is no question these are projects that need to be done. Nobody can seriously argue about that.”

Turnbull reiterated the government’s commitment to spend $3bn on the East West Link. “Our offer remains but clearly we need a Victorian government that chooses to proceed – it’s clearly not going to be this one.” He said a future Liberal government or Labor government might proceed with the toll road.

The $1.5bn was allocated by the Abbott government for the controversial East West Link. After Labor won the state election in November 2014 and Turnbull replaced Abbott in September 2015, Andrews expressed hope the money would go towards the Melbourne Metro rail project instead.

But the federal government’s latest plan contains just $10m for the rail project, to be spent on a study of how rising property prices around new rail stations could help pay for it.

On Friday Turnbull told Triple M radio in Melbourne the Melbourne Metro was an exciting project with “transformative prospects”. He said the federal government expected to “substantially support the Melbourne Metro in future”. But in the meantime it wanted to make sure it captured the value from property development to help fund the project.

“I’ve made it clear to the premier, Metro rail has the ability to create enormous additional value to real estate adjacent to new stations. There is a lot of opportunity to create value there, from the construction of the rail line.”

On ABC radio in Melbourne on Friday morning, the Victorian treasurer, Tim Pallas, welcomed the money for the Monash upgrade, and the $10m towards the $10bn Melbourne Metro project.

Pallas said he wanted to work collegially with the commonwealth government but had not yet formally received its offer nor been briefed before the announcement.

“This is a welcome first step and I hope that we can begin a more pragmatic approach with the commonwealth government but the proximity of the federal election continues to influence the way they deal with the state government,” he said.

Pallas rejected reports in Fairfax Media that to receive more federal government funding for the expensive Melbourne Metro, the state government would have to hand over more control of the project to the federal government.

“We are happy to engage the government at a senior level, but they can’t be involved in the day-to-day management of this project. That’s the responsibility of the state government. We’ve designed the project; we’ve been putting it together together progressively with a clear eye towards making sure Victorians get a modern Metro system.”

Turnbull is in Victoria for a Liberal party convention this weekend, with the funding announcements for road infrastructure coinciding with the visit.