Freight volumes on the route between Melbourne and Sydney are forecast to increase by 70% in the next 20 years.

Work has begun on the Wodonga Rail Bypass, the first step in the AUD501.3 million project to revitalise Victoria's north-east rail corridor by creating an interstate rail freight super-highway and delivering major passenger rail service improvements.

The North-East Rail Revitalisation Project will construct a rail bypass of Wodonga and convert 200 kilometres of broad-gauge track to standard gauge to deliver a first-class passenger and rail link between Australia's economic hubs, Melbourne and Sydney, and improve passenger rail services between Melbourne and Albury-Wodonga.

The freight route between Melbourne and Sydney is Australia's busiest, with freight volumes forecast to increase by 70% in the next 20 years.

The project is part of the AUD2.4 billion being invested by the Australian government and the Australian Rail Track Corporation in a better east coast rail freight line.

The North-East Rail Revitalisation Project will be completed in 2010.