A new entrance to Flinders Street Station from Southbank is being built to ease pedestrian congestion at Melbourne's busiest railway station.

Meanwhile, 240 new CCTV cameras and a new intruder alarm system will be installed inside the City Loop to reduce disruptions caused by trespassers.

An artist's impression of new pedestrian entrance to Flinders Street Station from Southbank Promenade.

The alarm system, which will be switched on next year, will instantly notify Metro Trains when someone illegally enters one of the Loop's four tunnels.

"That will deliver immediate notification to the operator if there is anyone trespassing on the tracks, so this is about improving public safety and also improving the reliability of our train system," Acting Premier James Merlino said on Monday.