Victoria has narrowly avoided a budget black hole after the Turnbull government agreed to redirect $1.5 billion of Commonwealth East West Link cash into other transport projects.

In a major win for Victoria - and an implicit acknowledgment that the $6.8 billion road link won't be built in the near future - the Commonwealth has agreed to open Tony Abbott's "locked box" of East West Link money.

The concession, detailed in a letter to State Treasurer Tim Pallas, means Victoria is likely to channel the money into Transurban's Western Distributor proposal to build a tunnel and elevated motorway connecting the West Gate Freeway with the Port, CityLink and the city.

The money might also potentially be channelled into a planned upgrade of the Monash Freeway, adding a third lane at the Hallam Bypass, which Mr Pallas said was of "great value".