The former minister, better known as Gerry, was elected as the federal member for Melbourne in 1983.

He went on to serve in ministries of Labor prime minister Bob Hawke and Paul Keating, including a period from 1987 as Aboriginal affairs minister.

In 1990, Mr Hand took the portfolios of immigration, local government and ethnic affairs, and was also named minister assisting the prime minister for multicultural affairs.

He retired in 1993, a decade after he was elected to the House of Representatives.

Mr Hand died on November 15 aged 81.

A state funeral service was held at St Ignatius Church at Richmond in inner Melbourne on Wednesday.

The service began with a processional hymn - Mozart's Laudate Dominum - before an acknowledgement of country, the Australian national anthem and the reading of a eulogy.

Prime Minister Anthony Albanese remembered Mr Hand as a man who "gave all he had to the Labor cause" and became very close colleagues with Mr Hawke.

"So much so that when Paul Keating became Prime Minister, he was asked why he had chosen to retain Hawke loyalists like Gerry Hand in his cabinet," Mr Albanese said in a statement.

Mr Hand spoke of his ministerial years as turbulent and he on more than one occasion had to make tough choices and wear harsh criticism, Mr Albanese said.

"Yet, tellingly, he retired from parliament with no expression of regret, only words of gratitude," the prime minister said.

Australian Associated Press