VICTORIA has been offered a reduced three-year contract to keep the Formula One Grand Prix in Melbourne until 2018, as the State Government ponders whether to keep it or kill it off.

F1 boss Bernie Ecclestone has offered the Napthine Government a deal two years shorter than normal in a bid to keep the race at Albert Park beyond its current contract, which expires in 2015.

Australian Grand Prix chairman Ron Walker told the Herald Sun he expects the Government to decide the fate of the race in the next three months.

"I think it will be a three-year term,'' he said.

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The last Grand Prix contract as a five-year deal brokered by the Brumby Government in 2010.

A shorter contract could form a key plank of negotiations as the Government tries to drive down the cost of the race to taxpayers.

"Negotiations are continuing between us and Formula One management and sometime next year we'll have an answer,'' Mr Walker said.

"At the moment there is an offer made by Mr Ecclestone and it will go to the Government, and if they think it's good value for money we'll continue. If they don't, we won't.''

But the Grand Prix will literally be cemented into Albert Park today when a permanent bronze plaque celebrating the race is unveiled by Aussie F1 greats Sir Jack Brabham and Alan Jones.

Mr Walker compared the statue to those of great Australian athletes surrounding the MCG.

Aussie F1 star Mark Webber, who will compete in his last Grand Prix before retiring from the sport on Sunday, told the Herald Sun he had been proud to compete in Melbourne over the years and hoped the race continued.

"If Australia wants to continue to be recognised as a host for international sporting events, the F1 Grand Prix, along with the Australian Open and other major events, should remain,'' he said.

"Melbourne is the home of sport in Australia, so it's fitting the Grand Prix is held there.''

Major Events Minister Louise Asher refused to say what length of contract extensions were being considered or when a definitive decision would be made.

"At the Government's request, the chairman of the Australian Grand Prix, Ron Walker, is holding negotiations regarding a possible extension of the contract,'' she said.

"The Government will not be making any announcement regarding the Grand Prix until they are complete and a decision has been made.''

peter.rolfe@news.com.au

Originally published as Shorter deal to keep F1 Grand Prix