Premier Daniel Andrews says he's held positive talks with the prime minister on finding alternatives for $3 billion federal funding committed to the scrapped East West Link.
But Treasurer Joe Hockey still holds out hope the tollway will be built.
Mr Hockey told Fairfax radio early on Monday talks between the federal and state government were ongoing, but he said building East West Link would boost jobs and productivity and it should proceed.
“I am still hopeful that Premier Andrews will change his position on East West,” Mr Hockey said.
Mr Andrews responded by saying his discussions with Tony Abbott had focused on identifying alternative, mutually supported infrastructure projects.
“I’m very encouraged by recent discussions I’ve had with Mr Abbott, as recently as Friday week ago, about ways in which we can work together if it’s in Victoria’s interest,” Mr Andrews told reporters.
“Maybe Mr Hockey and Mr Abbott need to talk more.”
Labor has halted work on East West Link in keeping with a state pre-election promise.
Mr Andrews also said talks were ongoing with the consortium that was to build East West Link.
“I think it is fair to say we are taking more care in getting Victorians out of this contract than the previous government spent and took getting us all into it,” Mr Andrews said.
In December, the Andrews government released a previously secret business case showing the benefit cost ratio for East West Link was just 45 cents for every $1 spent.
This increased to 84 cents when wider economic benefits were taken into account.