After 18 long months, state teachers at Victoria have finally clinched a deal with the government, entitling them to a pay rise of between 16.1 to 20.5 per cent over three years. About 45,000 state teachers are expected to benefit.

Principals stand to receive a 17 to 19.6 per cent increase, while education support staff will get between 12 and 17.1 per cent.

The new arrangement also comes with a $1000 sign-on bonus. All teachers, support staff and principals will receive the one-off lump sum on top of their salary.

The new deal, which still has to be ratified, will take effect in about three to four weeks.

A new arrangement will be worked out once the new pay rise scheme terminates on 2016.

"They won't be the best paid - they'll be the second-best paid when we get in front of NSW," Meredith Peace, Australian Education Union Victorian branch president, said.

The country's highly paid teachers are located in Western Australia.

Victorian Catholic teachers, whose wages are tied to those in state schools, are likewise expected to benefit from the new pay scheme.

However, the state government following the new deal will be working with state principals to come up with a more rigorous performance assessment process wherein teachers no longer automatically progress through the pay scale every year.

"We would expect only those who perform well and satisfactorily in their job would move to those next salary levels," Peter Hall, Teaching Profession Minister, told Fairfax radio on Thursday.

"Not everyone will be deserving of that."

In 2011, only 39 of about 40,000 teachers did not progress up the pay scale.

It is still not revealed how much the new pay rise will cost the Victorian government.

"This is an agreement that is consistent with the agreements we have signed with nurses, police, with the public sector," Premier Denis Napthine said.

"We are very, very pleased that we have been able to reach a mutually satisfactory outcome that delivers a fair and reasonable pay outcome for our hardworking teachers at a reasonable price for Victorian taxpayers."