Melbourne is set to become home to Australia’s largest contemporary art gallery as part of a major transformation of the Southbank arts precinct.

Premier Daniel Andrews, who will announce the gallery on Sunday morning, described the project as a once-in-a-generation transformation of the city's arts precinct that would deliver new "public space, better theatres and thousands of local jobs and attract millions of visitors''.

Artist rendition's of the proposed NGV Contemporary and 'transformation' of the Southbank arts precinct.

“It’s a game-changer for our city that will cement Melbourne as the cultural capital of Australia,” the premier said.