Victoria's Parliament voted last week in favour of expanding Melbourne by another 43,600 hectares.
Melbourne is already one of the world's largest cities by geographic footprint; stretching 100 kilometres from east to west. The expansion of the land is roughly equal to four Phillip Islands and is on the city's western, northern and south-eastern fringes.
The expansion is the biggest change to the size of Melbourne in almost a decade since the '2030 Strategy' was first released.
The decision has been applauded by Developers who have strongly argued the release of more land for residential development, will ease pressure on housing supply and affordability.
The plan was first revealed by Premier John Brumby in December 2008 as the 'Melbourne @ 5 million' planning up-date after reports of a booming population well in excess of forecasts that the '2030 Strategy' was hoping to cater for.
The expansion is to accommodate an additional 134,000 homes for Melbourne and provide 20 years of land supply for new housing.
Housing Industry Association Victorian (HIAV) executive director Gil King said members were very pleased with the expansion.
"It means that there will be more land released for housing to be constructed on. It will help the underlying demand. It will assist in making houses more affordable for all Victorians," he said.
Urban Development Institute of Australia executive director Tony De Domenico said he was delighted "that there is more access to land because that is going to help supply and demand".
"It will put Victoria in a better position to retain its competitive advantage over other states in terms of housing affordability - it is a pity it took so long to do," he said.
A spokeswoman for Planning Minister Justin Madden said the planning scheme amendment to expand the urban growth boundary was "fundamental to maintaining housing affordability".
"Expanding the boundary is a major component of the Brumby Labor Government's long-term plan to manage growth, keep house prices affordable and ensure our city remains one of the world's most welcoming and livable cities," she said.