An audit of the Federal Government's $3.5 billion commitment to Sydney's WestConnex project has found the scheme was not properly assessed ahead of the funding being released.

Key points: WestConnex is Sydney's biggest, and most controversial, road infrastructure project

WestConnex is Sydney's biggest, and most controversial, road infrastructure project The $16.8 billion project is due to be completed in 2023

The $16.8 billion project is due to be completed in 2023 A Federal Government commitment of $3.5 billion has been scrutinised

The audit was requested by the Federal Opposition and non-Government senators to assess what assessments were made before money flowed to New South Wales for the 33-kilometre motorway network.

The Australian National Audit Office report released today by the Auditor-General Grant Hehir found the project did not go through "the established processes to assess its merits of nationally significant infrastructure investments''.

It also found the Department of Infrastructure and Regional Development provided advice prior to the first payment of $500 million in mid-2014, that the funding was "of a magnitude not yet required".

According to the audit, the decision to provide the $500 million loan led to the project being approved without the Federal Government obtaining any analysis on whether statutory funding requirements had been met.

Interest rate under microscope

A large component of the federal funding for WestConnex is a $2 billion concessional loan to the NSW Government.

On this, the audit found that departmental advice to the Federal Government should have been more comprehensive.

Interest charged at 3.36 per cent per annum was found to be "well below comparable market rates" and robbed the Federal Government of $640 million.

The Opposition's spokesman for Infrastructure, Anthony Albanese, described the report as scathing of the Turnbull Government.

"By ripping up its own policy that it took to the 2013 election, saying that they would have proper planning and approval by Infrastructure Australia for any project of value above $100 million," he said.

The Minister for Urban Development, Paul Fletcher, described the report as narrowly focused.

Paul Fletcher has defended the Government's handling of the WestConnex funding. ( ABC News )

"This report had nothing to say about the substantial merits of the project," he said.

"It has one recommendation which is about the Department of Infrastructure and Regional Development making some changes to its processes in the way it provides advice to ministers. That's a sensible recommendation and of course the department will be accepting it."

The $16.8 billion project is due to be completed in 2023.