Running Liberal candidates in Labor-held inner-city seats effectively made them into safe Labor seats by splitting the opposition vote, Mr Demiris told the Liberal Party's State Council in Lardner, an hour south-east of Melbourne, on Saturday.

"If we don't run in some inner-Melbourne seats - like Brunswick, like Melbourne, like Richmond, maybe like Northcote - Labor loses," said Mr Demiris, who was appointed to the role in September.

The Greens have steadily eroded Labor's margin in each of those traditional stronghold seats since 2002, and won Melbourne in 2014.

The Liberals tended to run third in the seats so were eliminated, thus most of their preferences flowed to Labor, effectively giving Labor a 20 per cent head start.

Not running a candidate, as the party has chosen to do in the Northcote byelection, would make the contest between the Greens and Labor much more even.

Mr Demiris' plan will require approval by the party executive and is likely to be unpopular with many members who may resent the Liberals meekly rolling over in high-profile electorates.

Even if Labor saw off a challenge from the Greens, they would be forced to commit a lot more resources to shoring up their vote - robbing them of money to defend seats targeted by the Liberals, Mr Demiris said.

"By the close of play [Labor and the Greens] will have probably spent close to $1 million fighting each other [in Northcote]," Mr Demiris said.

"If we had run in Northcote we would have expended resources, money, had a candidate, a campaign team on they ground. And we would have done OK. We certainly would not have won.

"By not running in Northcote we have seen the ferocity that Labor has to go to to fend off the Greens."

Mr Demiris offered a blunt threat to Labor: preference the Liberals above the Greens in Higgins, which the party is trying to defend, and Prahran, which it lost to the Greens at the 2014 state election. Otherwise, the party would consider not running candidates in the four inner-city electorates where Labor is fighting the Green tide.

In response, a spokesman for the Labor Government told Fairfax: "The Liberals are irrelevant to our plans for Victoria."

Meanwhile, speaking in Northcote, Greens leader Richard Di Natale said the greening of inner Melbourne was inevitable.

"Whether Northcote turns Green today or whether it turns Green at the next state election will be a question for the voters to decide," Senator Di Natale said.

"But make no mistake, Northcote will be a Greens seat, Batman will be a Greens seat, Melbourne Ports will be a Greens seat and, of course, state seats like Richmond and Brunswick are all potential gains for the Greens."