Acting Premier James Merlino on Sunday confirmed $200 million allocated in last month's budget would go to the Plenary Group to expand the convention centre. The company will contribute more than $100 million towards the project, which will include a second hotel.

It comes as the Plenary Group and its partner moves to sell the existing Hilton Hotel, built under an original public-private partnership with Labor in 2009, for a reported $250 million.

Planning Minister Richard Wynne last week approved the centre's expansion, flagged in the 2015 budget.

The Plenary Group is a big donor to Victorian Labor, giving $48,650 to the state branch last financial year. It gave $2500 to the Liberal Party in Victoria in the same period.

While it has favoured Labor in Victoria recently, since 2008 Plenary has donated $289,000 to the country's major political parties.

Asked why it donated so much to political parties, a Plenary spokesman said the firm attended forums and other events where policy and infrastructure issues were discussed. "Our focus is to gain a current understanding of infrastructure policy direction," said Plenary's Kelvyn Lavelle.

He said the firm declared all political donations, and pointed to a 2014 press release from then premier Denis Napthine committing to expanding the convention centre as evidence the funding from the Andrews government had nothing to do with donations.

The project will add nearly 20,000 square metres of event space to the convention centre.

The extra space will generate an additional 74,000 international visitors annually to Melbourne, the government estimates, boosting the state economy by $167 million - based on an estimated daily spend by each visitor of $693 a day.

"This expansion will help keep our hotels full, our restaurants and bars buzzing and our economy strong," Mr Merlino said.

Asked whether donations by property developers to political parties should be banned in Victoria - as they are in NSW - Mr Merlino said that following the law should be enough.

"My view in regards to donations is that the Labor Party, the Liberal Party, all political parties, should abide by the law of the day and that's exactly what the Labor Party will do."

The convention centre expansion will not affected the existing public-private partnership signed with Plenary in 2009, which expires in 2034.

Peter King, the convention centre's chief executive, said the expansion was critical to ensuring the venue could continue to accommodate the growing global demand for conference space. The convention centre attracts over 2 million visitors annually.

Construction of the new centre is to be complete by 2018.