Victorian Ports Minister Dennis Napthine said on Monday that the state government would keep the Port of Melbourne in public hands and would even invest $400 million at Webb Dock.

The investment would add more wharf space and vehicle pre-delivery inspection facilities capable of handling more than 600,000 vehicles a year from the current 375,000 capacity. The upgrade would make the port Australia's busiest.

The expansion would create 1,100 new jobs, of which 400 would be during the construction phase. It would also reduce traffic at the Westgate Bridge since vehicles would be inspected on site rather than at facilities in Altona and Laverton at the western suburbs.

Currently, about 60 per cent of imported vehicles are sent to the West Gate before it is sent back east. The Victoria government initially planned to build the car trade port in Geelong but changed its plans due to insufficient land area and problems of access.

Prior to the announcement of the wharf expansion venture, the Port of Melbourne announced the construction of a new container port at Webb Dock and a director road link from the ports area to the West Gate Freeway.

The vehicle imports and exports facility will be paid by the Port of Melbourne Corporation, not by the Victoria government.