Developers have been eyeing off the area for more than a decade and plans to transform the area into a new suburb began in earnest last year, when the Metropolitan Planning Authority drafted plans for a new residential centre in Rockbank.

But the planned development has been blasted by RMIT planning expert Michael Buxton, who said it represented "everything that's wrong" with planning in Victoria.

The 752 hectare development, 29 km north west of the CBD, will include almost 8000 homes, a school and other community facilities. It is bounded by the Western Freeway to the north, Greigs Road to the south, and Paynes Road to the west.

In a statement, Kororoit MP Marlene Kairouz said: "more and more people want to call the west home and they deserve the opportunity to buy affordable land, build their home and access the infrastructure and services needed for rich and satisfying lives."

Rockbank sits between Caroline Springs and Melton, and the new suburb will be near the Rockbank train station, which has only a single line and is serviced by V/Line trains.

In nearby Caroline Springs, works have only just begun on a train station to cater for the suburb, which began to be built in 1999.

The new Rockbank suburb plans are separate to works currently taking place north of the Western Freeway, where a new estate, called Woodlea, is being built. That development is a joint venture between Mirvac and Jayaland, and a spokeswoman for Planning Minister Richard Wynne said the first stage of land sales (75 lots) sold out in 45 seconds last month.

The announcement marks the postscript on Labor's Melbourne 2030 policy, which sought to contain new development to within growth boundaries. Previously, Rockbank had been designated a green wedge area, and Melton City Council envisaged just 1500 people living in the township.

Greens MLC Greg Barber questioned whether Rockbank station would be upgraded to cater for thousands of new commuters.

"Governments have been on notice for years that they need to duplicate and electrify the line. Surely we're not going to get another suburb built without adequate train services."

Fairfax has contacted PTV for comment.

Under Melbourne 2030, the former Labor government wanted to restrict development in greenfields sites to 30 per cent, to limit Melbourne's sprawl.

But on Friday, Planning Minister Richard Wynne said in a statement that growth areas would house almost half of Melbourne's population by 2050; the equivalent of another city.

"Managing growth sets the ground for planned development and liveable communities for families in our outer suburbs," he said.

Property Council of Australia deputy executive director Asher Judah said the expansion of Melbourne was "great news" for aspiring home owners, and the regular expansions to the urban growth boundary were the main reason Melbourne house lot prices were cheaper than in Sydney.

"Melbourne has virtually no physical barriers to urban expansion in the west and north. Thus, expansion is not only possible, it is recommended."

Melton City Council chief executive Kel Tori said the council was "extremely pleased" with the news, with demand strong for housing in the area.

In 2010, the state government extended the urban growth boundary to permit residential development at Rockbank.

Mr Buxton said the "sorry saga" of the Rockbank showed "everything that's wrong with Melbourne planning".

"This kind of development never should have been considered because it's outside the original green belt, which was legislated in 2003, and there was more than enough land within the urban growth boundary to cater for increased growth," he said.

"It's just going to place thousands more people on the extreme fringes of Melbourne where there aren't services to cater for them. It just keeps happening as if there's a never-ending supply of land, and there's not."

Mr Wynne said the government would consult on the proposal for four weeks, and the government wanted to have it finalised by next year.