Hundreds of North Melbourne and South Yarra properties will be compulsorily acquired by the Andrews Government to make way for the cross-city Melbourne Metro Rail project.

The Melbourne Metro Rail Authority sent letters to 21,000 residents and businesses along the rail alignment, which runs nine kilometres from South Kensington to South Yarra.

The project - which hasn't yet been fully funded despite a tight self-imposed time frame by the Andrews Government - is expected to cost up to $12 billion.

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Although it will dramatically increase the number of passengers and trains handled by the network, it will also impose significant costs - including temporary noise and visual impacts during construction, changes to infrastructure, and acquisition of scores of businesses and homes.

Public Transport Minister Jacinta Allan confirmed their would be "hundreds" of properties acquired.

"At this stage there is an expectation that the numbers of properties that will need to be acquired will be in the hundreds and the final number will be settled and of course made public, once the final scope of the project is locked in," Ms Allan said.

Ms Allan said the mailout to residents and businesses along the alignment was a first phase.

"When it comes to having a conversation with people about their properties that may be acquired, that's going to be an intensive separate consultation phase that will happen when the final scope of the project is settled,"

"It won't be a long period between now and that phase of intensive communication with affected property owners. We expect that to happen in a couple of months. But what will be important is that it is a process that is direct, it is respectful, and that property owners have the chance to talk directly with the authority about what it means for them."

Ms Allan also reiterated that the government was hopeful of securing funding for the project from new Prime Minister Malcolm Turnbull.

Former prime minister Tony Abbott previously refused to provide Commonwealth money for urban rail projects, arguing the federal government should "stick to its knitting" and only fund roads.

But in contrast, Mr Turnbull argues various projects should be assessed on their merits, without bias against particular transport modes.

The cost of the project is expected to be roughly evenly split three-ways between Victoria, the Commonwealth and the private sector.

Opposition Leader Matthew Guy said the government was keeping people in the dark with spin, accusing the minister of "cruelly misleading" people about the exact number of homes and business to go.

"[The government] should come out and tell the truth. Whose house is going to go? In what areas will houses go? And how many people are going to be affected?" Mr Guy said.

"What we have seen from the government is far from honest and certainly far from consultative."

But the Liberal Leader said it would be proper for homeowners to be told privately about potential losses before media were informed.

Mr Guy said Labor should uphold the same standards of transparency it demanded when in opposition to the East West Link.

The letter urges people who are affected to attend one of three public information sessions.