Melbourne City Council will announce five key concepts for the $250 million makeover, following initial community consultation.

Under the plan, the former Old Melbourne Cemetery and existing car park will be turned into a large public space. New basement car parks will be built beneath three northern sheds, along with possible storage facilities.

Queen Street at the eastern entrance will be closed to cars and a stretch of Franklin Street rerouted for more direct traffic flow to and from the city.

Meanwhile, at the southern end of the site, an entire city block could be sold off to developers to help fund the rest of the redevelopment project.

The land will be given to the council by the state government and will likely become home to a mixed-used development.

Recent public consultation revealed a resistance to ''radical'' development of the market, as ''many participants struggled with the concept of change''.

Lord mayor Robert Doyle believed the announcement would be met with ''some sense of relief''.

''What we'll finish up with is what people recognise as Queen Victoria Market,'' he said.

Chairman of the market's board of management Paul Guerra said the redevelopment was ''the most difficult task in Melbourne today'', as they negotiated protecting the market's history and future viability.

Traders had favoured a multi-storey car park to a basement one as they believed it would be ''safe, cheaper and less disruptive''.

But Mr Guerra said the board was now convinced that underground parking was the best solution. He said the market should and would continue trading through the revamp, although there would be inevitable disruptions that would have to be managed.

''If nothing is done today it's going to mean that we're going to lose what we've got,'' he said.

This month the management team was visited by international market expert David O'Neil, who said the biggest challenge for the market was keeping its ''soul intact'' during the development.

The Philadelphia-based consultant said one of the site's key problems was the fact it turned into a ''dead zone'' when the market was not operating. He said an important reform was introducing permanent restaurants and attractions around the market precinct, that would operate 24/7.

Many details and costs of the proposals remain unknown, with a second phase of consultation beginning on Tuesday to guide a draft master plan to be released later this year.

Cr Doyle said he imagined the new public plaza being a ''large green space'' where people could relax. The remains of about 6000 people buried at the cemetery lie under the car park and Cr Doyle said he did not think it was right to cover this significant site in asphalt.