The upper house economy and infrastructure committee review found the city's free tram zone should be expanded along St Kilda Road to the arts precinct, as well as towards the convention centre at South Wharf.

The free tram zone, which covers central Melbourne and some surrounding areas, was introduced in 2014.

There are about 35 million free trips in the zone per year.

The inquiry heard the popular scheme has caused overcrowding and slowed down the tram network in central Melbourne.

But it found that expanding the free tram zone would be good for tourism.

The inquiry also found major event organisers should be able to apply to provide free tram travel on a designated route for the duration of their event.

It's estimated expanding the free tram zone would cost $14.8 million a year in lost fare revenue.

The parliamentary committee says the government should start modelling the impact of COVID-19 on public transport use across Victoria, with working from home potentially reducing ongoing demand.

While the inquiry stopped short of recommending free travel for students and seniors, it has recommended more generous reimbursements for regional Victorians travelling to hospitals in Melbourne for specialist medical treatment.

Australian Associated Press