The auditor-general has found fare evasion is likely to add $350 million to the cost of the myki ticketing system.

Fare evasion on Victoria's trams, trains and buses rose from 7.8 per cent in 2008 to 13.5 per cent in 2011.

The auditor-general's report, tabled in State Parliament, has found the transition to the myki system is largely to blame.

It found the state might have to pay more than $350 million over about four years to cover the shortfall in profits guaranteed to the private tram and train operators.

"This increase in fare evasion has had financial consequences for the state," the report says.

"Under the transition arrangements for myki, the state bears all revenue risk by guaranteeing [that] the tram and metro train operators receive the revenue forecast in their bids.

"Increased fare evasion has contributed to the gap between actual and forecast fare revenue."

In the 2010-11 financial year, fare evasion cost around $85 million.

"Growing patronage and rising fares have meant fare evasion has grown rapidly," the report says.

It also found the Government's instruction to inspectors to be "lenient" during the myki rollout contributed to the increase in fare dodging.

"The department acted too slowly to the fall in enforcement that was apparent from the first half of 2010," the report says.

The State Government says measures to tackle fare evasion are working.

Public Transport Minister Terry Mulder says fare evasion has dropped by around two per cent so far this year.

"We have a partnership arrangement with the franchise operators. They have responded," he said.

"When we look at the auditor-general's report, it now indicates that fare evasion is coming down particularly on the tram network. It was also coming down steadily on the train network."

The head of Public Transport Victoria, Ian Dobbs, is confident a crackdown on fare evasion is working.

He says more ticket inspectors have been hired, and transport chiefs are trying to make it harder for people to cheat the system.

"I've been talking to the managing directors of the tram and the train and the bus businesses just in the last few days about ways we can actually improve revenue protection, and the ways we can better deploy and use the time of AOs (authorised officers)," he said.

"At the moment they're actually only issuing about one fine per shift and we actually think that can be improved."