Christmas will undergo a "brand refresh" in Melbourne this year, as millions of dollars are spent to transform the city into Australia's Christmas capital.

Melbourne City Council has budgeted $3.78 million to fund and promote its month-long Christmas festival, with new attractions to add to the Advent calendar.

Melbourne Town Hall will again be gift-wrapped in lights this Christmas. Credit:Lindy Percival

New decorations include large letters spelling out "Merry Christmas", to be installed on Princes Bridge at a cost of $70,000. And Federation Square will play host to a Lego Christmas tree, while the Federation Bells in Birrarung Marr will be programmed to play Christmas carols.

A new mascot, the Gingerbread man, will join Melbourne's two original Christmas characters, Santa and the Nutcracker soldier.