Legislation to lease the port enters the upper house this week, where the Coalition and Greens will join together to block the bill and send it to an inquiry.

The Andrews government says its proposal could earn the state up to $7 billion, which it would use to remove 50 level crossings, as well as setting up a $200 million fund for agriculture.

The government believes it will get a better price by leasing the port through parliament as this would provide business with more certainty about the port's future. However, Treasurer Tim Pallas has not ruled out bypassing the upper house's roadblock and just putting the port on the market. Also at stake is a 15 per cent bonus payment from the federal government, under its asset recycling scheme.

The showdown follows a resolution to the dispute between port user DP World and the Port of Melbourne corporation over a rent increase, including an agreement that rental increases would be regulated by agreement for the life of the proposed lease of the Port.

The Australian Financial Review reports that DP World is believed to be paying around $25 to $29 per square metre at the container terminal, rather than the $120 per square metre that had been proposed.

DP World Australia chief executive Paul Scurrah said the new arrangement would provide acceptable rent levels to both parties. The new lease would grant 50 year tenure to DP World Australia to 2065.

'Serious concerns' across business and industry

Despite planning to sell the port if it had been re-elected, the Coalition has serious concerns over the length of the lease, compensation clauses and cost increases for users.

A logistics and shipping industry coalition is calling on the Andrews government to listen to the concerns from across business and industry.

The group's spokesman, Rod Nairn, said while the industry was in favour of privatisation, the current model would fail to deliver improved port efficiency, services or support the competitiveness of Victoria's supply chain.

The group believes there would be a clear mandate for the Federal Government to intervene if concerns are not addressed, given the significance of the Port of Melbourne for Australian trade.

The news came as Opposition Leader Matthew Guy released the terms of reference for a parliamentary inquiry into the port lease. The inquiry has the backing of the Greens.

The Coalition wants the committee to examine the proposed lease and report on its duration, the potential impact of a second container port and the effect on the environment of any expansion of the current port.

It would also look at potential impacts on the Port of Melbourne's competitiveness and its supply chain.

It would present its final report by November 30, which is too much of a delay, according to business group VECCI.

During the winter break, Treasurer Tim Pallas told a meeting of the Association of Bayside Municipalities that there would be no blasting of the heads of Port Phillip Bay, but could not rule out that a future government may need to dredge the bay.

There has been a campaign run by the Coalition claiming that Labor's ports policy would result in environmental damage caused by using explosives at the heads of the bay due to the port needing to be expanded.