'Game changer': State commits $2.2b to first section of Suburban Rail Loop

The massive early works package has been committed without a business case being finalised, a step that is set to occur early next year. The North East Link's early works package totalled $195 million.

It also comes as another two major transport projects – the $6.7 billion West Gate Tunnel and the $11 billion Metro Tunnel – face billions of dollars in cost overruns and delays.

Mr Andrews said the 26-kilometre twin tunnels had long been put in the too-hard basket. His government would deliver on its promise before the 2018 election to build the major project, he said.

"They've [the projects] always been too hard in the past, and we're getting on and getting them done," he said. "This is what we said we would do ... this is real."

Mr Andrews said the link would allow commuters to avoid travelling into the city and give them access to every major rail line, providing links to jobs, education and activity hubs. The project is also designed to create 800 new jobs.

"Going to the city if they need to, but not being forced to do that," Mr Andrews said. "No need for a timetable so frequent are these services [going to be]."

Landowners of up to 300 homes and residences have been notified that their property is in an area that may be impacted by the project, which will start to be built in 2022. An environmental effects statement assessing the project's impacts will get underway early next year.

Many of the underground stations will link up with existing stations at Southland, Clayton, Glen Waverley and Box Hill, while the proposed new stations at Monash and Burwood will be located beside Monash and Deakin universities.

Monash station would be built north of Monash University on the corner of Normanby and Howleys roads, while the proposed Burwood station would be built south of Deakin University, near the corner of Burwood Highway and Elgar Road.

Mr Andrews said the price tag for the Suburban Rail Loop should be viewed in light of the "aggregate cost" of not building it.

"The cost of not building this … will be freeway networks that just do not work at all," he said. "That pre-pandemic traffic will be nothing compared to what we will see in decades to come."

The government has signalled that construction at Box Hill will be especially complex due to it being a dense urban area, while the project will include a brand new fleet of trains and a stabling facility for the rolling stock. The rail corridor will also be realigned between Cheltenham and Box Hill.

The early works would be aimed at relocating gas, water and other utilities, power and road upgrades and enabling launch sites for tunnel-boring machines. It will also go towards the purchase of land and building new substations. The package will be released to the market by the end of the year.

The government is planning to purchase brand new rolling stock for the rail link, flagging it will be looking at purchasing smaller trains that will be four to five carriages long.

The proposed station locations follows 18 months of site investigations, engineering assessments and community consultation. The state stumped up $300 million for the project's planning in last year's budget and today's announcement takes the total amount committed to the scheme so far to $2.5 billion.

Transport Minister Jacinta Allan described the project as a "game changer", and "should have been built many decades ago".

"We are committed to delivering the Suburban Rail Loop," said Ms Allan.

"We will be guided by the advice that comes through from the investment case."

The project has been broadly welcomed by public transport advocates, who say it is a welcome boost to the city's network, even if it is expected to take 30 years to build.

But there are calls for light rail to be used instead of trains, while some have pushed for a different rail link – the Melbourne Metro 2 – to be prioritised. That line would connect Clifton Hill station with Newport via the CBD and Fishermans Bend.

Financial ratings agency Moody's warned in July that the Suburban Rail Loop would put a serious strain on the state's finances in the coming decades.