Preston Market, one of Melbourne's oldest traditional markets, is slated for a radical overhaul costed at half a billion dollars.

Proposals to build 28-storey apartment blocks on the market site, comprising 1500 new dwellings, have been lodged with Darebin Council, seeking an exemption to the current 10-storey height limit in the area.

Developers Salta Properties and project partner Medich Corporation proposed changing building height limits in order to build residential towers "which will respond to the forecasted growth of the municipality, and will provide greater housing diversity and housing sustainability for the area", according to documents prepared for the council.

The plans for the Preston Market include a piazza, outdoor dining areas, and an office precinct as well as apartments to complement the current fresh food market.

Construction costs for the renovations are estimated at 550 million, according to council documents – double the cost of all construction works undertaken across the City of Darebin in 2013.