Twenty-five homes and seven business premises will be demolished, but the wider Cheltenham community will get its wish not to have a new "sky rail" built in its midst when the Charman Road level crossing is abolished.

The Andrews government revealed its plans for the removal of three key crossings on the Frankston line on Monday, at Charman Road and Park Street in Cheltenham and Balcombe Road in Mentone.

The announcement ends months of speculation by residents that unpopular elevated rail would be built, but also means more people in the area will be forced to sell their properties.

The railway line will be put in a 1260-metre trench, passing below the road, at both sites, a more costly option that will also require significantly more property acquisition.