More than $1 billion of public transport improvements on rail lines across the state, including to Geelong, Warrnambool, Gippsland, Bendigo, Echuca, Ararat and Maryborough, will be re-evaluated and potentially scrapped by the Andrews government, just one week after being funded in the state budget.

"We laid out a clear plan for a revival ... to every single passenger line across regional Victoria and the Prime Minister said no," Victorian premier Daniel Andrews said on Wednesday.

"Now we are going to have to go back through each and every one of those projects and carefully consider, because of the fact that Malcolm Turnbull has ripped off Victoria by ratting on his deal with our state."

Victoria argues it is owed $1.46 billion from the Turnbull government for leasing the Port of Melbourne, under a federal "asset recycling scheme" to reward states with a 15 per cent bonus on top of the proceeds they get from privatising state-owned assets.  

The Victorian government's $1.45 billion Regional Rail Revival was announced this month in expectation of receiving the full amount from Canberra.

It includes a $435 million upgrade of the Gippsland line to improve train frequencies and speeds, a $518 million upgrade of the Ballarat line, including duplication between Deer Park and Melton, a $110 million Surf Coast rail boost and a $100 million boost to the Warrnambool line, which has been hit by chronic level crossing problems.

The Ballarat line upgrade was funded in the 2016-17 state budget and has already been put out to tender and it is believed this project is not under threat from the budget shortfall.

Tuesday's federal budget included $500 million for Victorian rail and $461.2 million "provided for future projects identified with the Victorian government".

Mr Andrews said the shortfall was a serious problem and threatened its plans for regional Victorian rail.  

"You can't do $1.45 billion of rail upgrades with about $500 million," he said.

The $500 million was also directed to specific projects, another deviation from the terms of the asset recycling deal, which said states could spend the money on worthwhile projects of their own choosing.

Tuesday's federal budget includes $100 million for duplication of the Geelong line to Waurn Ponds, $100 million for the North East Line between Melbourne and Albury, $195 million for the Gippsland line and $95 million for the Avon River bridge towards Bairnsdale.

It also has $30 million for a business case for a rail link to Melbourne Airport, and a further $20.2 million for Murray Basin Rail, a freight project.

Prime Minister Malcolm Turnbull denied Victoria was being short-changed in the budget and hinted his government could ultimately invest much more than $500 million in rail.

"We are putting in the money to examining the Melbourne to Tullamarine rail project and if that stacks up, that would be ideal to invest," Mr Turnbull said in an interview on Southern Cross Radio.

"We've got a $10 billion national rail fund and we've guaranteed initially $1 billion of that to Victoria, we can do more in Victoria but what we've got to do is find the projects."

Latrobe City Council urged the two governments to reach agreement on the Gippsland rail upgrade, fearful the funding stoush could kill the project.

"It is too important for our future for this to descend into a political tug of war," Latrobe mayor Kellie O'Callaghan said.

"Surely there can be no debate that the rail line to Gippsland is the least efficient, least reliable and least effective rail line in Victoria."