Councils in Melbourne's south-east fear that plans for a new tram line linking Caulfield train station and Monash University in Clayton have been put on the back burner, with the project receiving no money in the state budget.

Before last year's election, Premier Daniel Andrews promised his government would plan and design a new 18-kilometre tram route linking Caulfield and Rowville. It was to be built in two stages, with $3 million assigned for planning in last year's budget.

The first stage would connect Caulfield station and Monash University's Clayton campus, where thousands of students and workers are forced into cars due to a lack of public transport.

The second stage was set to link the university with Waverley Park and Rowville.