A liquor licence ban that has stopped new boutique bars and live music venues serving alcohol past 1am is being scrapped to reinvigorate Melbourne's nightlife.
The regulations were introduced in 2008 to combat late night street violence.
But Liquor Regulation Minister Jane Garrett says research shows small venues are low-risk.
Venues that hold less than 200 people will be able to apply for exemptions from July 1, provided they have the backing of local councils.
Temporary extensions will also be granted to venues of all sizes for major events including sporting and cultural events and on New Year's Eve.
"Melbourne is the envy of Australia in terms of our vibrant and diverse bar scene, our live music is world renowned and we want to see that culture go to the next level," she said.
"People call us the Capital of Cool. This is going to make us even better."
But larger venues with a capacity for more than 200 patrons won't be eligible for exemptions.
The freeze for them is being extended until 2019.
Ms Garrett said boozy "beer barn" venues where people go to drink all night posed a bigger risk to community safety.
"We believe this is getting the balance right by protecting the community from alcohol related harm while seeing our city thrive.
The regulations apply to venues in the Melbourne, Port Phillip, Stonnington and Yarra council areas.
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