The Andrews government has announced plans to build a massive $1.5 billion hospital in Footscray.

Premier Daniel Andrews promised the new 504-bed hospital could allow up to 15,000 new patients to be treated each year, with an additional 20,000 emergency department admissions.

The preferred location for the development is the Victoria University Footscray Park campus on the corner of Geelong and Ballarat roads.

Up to $1.5 billion would be invested in the project, with construction starting within two years.

To meet growing demand in the city's west, the Joan Kirner Women's and Children's Hospital will open its doors next year.