And the rail authority behind construction of the new tunnel has said most of Swanston Street will remain open to pedestrians during construction of the rail tunnel.

But an idea put forward by Lord Mayor Robert Doyle to open up Swanston Street as a green boulevard while tunnelling takes place now appears highly unlikely to happen.

Speaking from the banks of the Yarra on Wednesday morning, Mr Andrews said a tunnel boring machine would be used to dig under the river, in what could be the most difficult aspect of the project.

A video the government released on Wednesday morning shows how the tunnel boring machine would complete the difficult technical feat of getting under the Yarra's muddy river soil.

Mr Andrews and Public Transport Minister Jacinta Allan said the boring machine would reduce the environmental impact on the river and limit inconvenience to pedestrians and commuters.

The government had been considering other methods to get beneath the river: damming the river one half at a time and building a tunnel, or lowering tubes into the river.

The tunnel will be 11 metres below the surface and will sit to the east of Princes Bridge, around seven metres below the riverbed.

Mr Andrews said the tunnel boring machines would excavate the two Melbourne Metro rail tunnels between the new CBD South and Domain stations.

Tunnel boring machines are currently being used to build New York's Second Avenue Subway project and London's massive CrossRail project.

The machines enable an excavated tunnel to be immediately sealed with a concrete lining.

The Melbourne Metro project will see construction of a nine-kilometre rail tunnel stretching from South Kensington to South Yarra.

It is planned to travel underneath Swanston Street in the CBD, as part of a new Sunbury to Cranbourne and Pakenham line.

The project has been committed to by state governments on and off since the early 2000s, but is now to include five new stations. Mr Andrews has pledged to start construction before the next state election in 2018.

Public Transport Users Association spokesman Daniel Bowen said it was good to see the project pushing ahead, but there were still major questions around funding - the government has only $4.5 billion of the expected $11 billion budget - and disruptions to Swanston Street, and to tram and rail users.

"There are also questions as to how people will interchange to and from trains running through the tunnel," Mr Bowen said. "The design of interchange facilities at the new CBD stations and at Caulfield, and the frequency of services will be critical to making the new line work for passengers."

Ms Allan said the government was "finalising the business case" for the project, and that it would be done "at the end of the year".

At an event on Tuesday night, held for those on Swanston Street who might be affected by the tunnel project, the Melbourne Metro Rail Authority confirmed that most of Swanston Street would remain open to pedestrians during construction.

East-west connections at Lonsdale, Bourke and Collins streets would also be maintained, a spokesman for the authority said.

The city spine will close to traffic between Franklin and Latrobe streets to the north, and Collins and Flinders Streets to the south, where two new underground stations are planned.

Trucks will use the stretch of Swanston Street between Latrobe and Collins streets to transport spoil from tunnelling works away from the CBD.

But the world's busiest tram corridor is most likely to see heavy vehicles making thousands of trips out of the tunnel carrying spoil, putting paid to visions of the street's temporary reinvention as a grass-topped public space.