Lindsay Fox. Credit:Justin McManus

''Anyone with this kind of older title is likely to [want the same deal] and we cannot have the situation where we lose hundreds of square metres of public beach.''

Mr Guy, who said he became aware of the titles office's decision only after his environment minister raised it with him, said the office had ''questions to answer'' and both ministers had issued a ''please explain'' to the agency. He said he was yet to see the advice the agency relied on and the government would now have to clarify the official location of the high-water mark across the whole state.

The extension of Mr Fox's title added 37 per cent more land - or 2400 square metres - to the two main Fox properties on the exclusive Portsea clifftop, extending the boundary past their house-sized boatshed and over the beach by 47.26 metres and 44.40 metres. The billionaire paid a $477.80 application fee for land worth $5.4 million based on recent sales.

Mr Fox has argued for 17 years that the property line of his $20 million family compound extended across the Point King beach to the margin of Port Phillip Bay. What constitutes the bay's margin has been a murky issue. Previous governments rejected Mr Fox's position.