Up to $700 million in National Disability Insurance Scheme funding will be guaranteed for Victorians with disabilities after the state and the Commonwealth settled a lengthy stand-off over the money.

The State Labor government says a deal signed by Premier Daniel Andrews and Prime Minister Scott Morrison finally settles a long-running dispute and will allow the NDIS to start making a difference in the lives of Victorians with disabilities.

The deal also resolves the row between Melbourne and Canberra over Victoria’s share of the bitterly contested $1.6 billion "under-spend" on the NDIS.

Hope for Victorians with disabilities as Victoria and the Federal government resolve their differences over NDIS

The federal government was accused by states and the Labor opposition in April of using the money to prop up its return to surplus instead of spending it providing disability services, a charge furiously denied by the Morrison government.