Victoria's proposal for a purpose-built COVID-19 quarantine facility is gaining traction, with federal Treasurer Josh Frydenberg lauding it as "the most comprehensive".
Mr Frydenberg confirmed on Wednesday the Morrison government was still considering the Victorian plan.
The state last month proposed the 500-bed facility at Mickleham, north of Melbourne, and wants the Commonwealth to fund and build it.
The $200 million proposal remains a political football, with Victorian Health Minister Martin Foley criticising the federal government for not committing funds to it in Tuesday's budget.
Victoria would provide $15 million for design of the centre, and also operate it.
"The most comprehensive proposal has come from Victoria, and we are working that through our internal processes," Mr Frydenberg told the National Press Club.
His comments come after Prime Minister Scott Morrison last week described the quarantine plan as "fair dinkum".
Mr Morrison repeated his praise on Wednesday, calling it "very comprehensive".
Victoria's latest virus infection is an international traveller who returned to Melbourne via hotel quarantine in South Australia, further fuelling criticism that hotels are too risky.
But Mr Frydenberg defended the current quarantine regime, pointing to NSW.
"Outside of Victoria (last year), and they have obviously worked to improve their system, (hotel quarantine) has been largely very effective," he said.
"The bulk of the heavy lifting with respect to quarantine has been done in NSW who have been taking two, three, four times the number of people ... than other states have been.
"Yet that is the state that hasn't gone into a lockdown at all across the whole state."
Mr Foley was unimpressed the federal budget did not earmark funds for the proposed facility.
"We are disappointed that the Commonwealth didn't take the opportunity to fund the Mickleham facility," Mr Foley said.
"I did note the Treasurer didn't rule it out in some of his public comments (on Wednesday) - that's a positive.
"Hotels were not designed to be quarantine facilities.
"If we want to have a safe system that protects us from this raging pandemic ... it is going to be by having the best possible hotel quarantine system."
The state opposition has accused the state government of hypocrisy, saying an FOI document shows Chief Health Officer Brett Sutton edited draft advice to recommend hotel quarantine before it was agreed to by national cabinet last year.
"They're the ones that called for hotel quarantine," Deputy Victorian Liberal Leader David Davis told reporters on Wednesday.
"It is a bit hypocritical to point at the federal government when hotel quarantine was your idea."
Australian Associated Press