Victoria won't build a new station in South Yarra despite a federal push to get it included in the $11 billion Melbourne Metro Rail project.
Treasurer Tim Pallas ruled out adding the station to the project, which Victoria has funded without federal help.
"We won't be building a station at South Yarra. Simply because it doesn't stack up," Mr Pallas told reporters on Tuesday.
"We've released the business case, it indicates that South Yarra is about a 10 cent return in every dollar invested."
Victoria is due $1.46 billion in top-up funds for the sale of the Melbourne port lease, but Canberra has so far only offered $877 million to go towards the Metro Rail.
The federal government was reportedly prepared to offer the extra $600 million, but only if it went towards a South Yarra station.
Local Liberal MP and federal assistant Treasurer Kelly O'Dwyer has argued for the station, which is predicted to cost up to $1 billion, to be included as part of the Metro Rail project.
But federal Infrastructure Minister Darren Chester said it wasn't on the table.
"She wouldn't be doing her job as a local member of parliament if she didn't advocate for a local project," Mr Chester told ABC radio.
Instead, Mr Chester said he wanted to reach an agreement over the $877 million set aside for Victoria.
Opposition leader Matthew Guy said South Yarra needed a major upgrade, and local Greens MP Sam Hibbins agreed the people want it.
"This project has the overwhelming support of the South Yarra community," Mr Hibbins said.
