Victorian Premier Ted Baillieu has labelled the Federal Government's backflip on Victorian hospital funding as "a short-term political fix".

The state's public health service was facing a $107 million cut from the Commonwealth, forcing the closure of beds, and services.

The Federal Government last night announced it would reverse the decision, but it is bypassing the State Government and will pay the money directly to the hospitals.

"The $107 million will welcome by hospitals but this is a short-term fix and this is nearly $107 million out of $1.6 billion of cuts that they announced in November," Mr Baillieu said.

"The $107 million is for this financial year and these cuts will resume on July 1."

Mr Baillieu says he received an angry letter from the Prime Minister overnight, accusing him of being unable to run the health system.

"What we have now is a short-term political fix with an extraordinary threatening letter from the Prime Minister," he said.

The Government says the money that is being given back to hospitals is coming from other grants intended for Victoria.

Federal Health Minister Tanya Plibersek defended the move saying the Commonwealth has been giving more money to Victoria, but the result for patients is worse.

"I can no longer allow the Victorian Government cuts to continue to affect patients in this way," Ms Plibersek told ABC local radio.

"If we could give it to a government that would pass it on to hospitals I would do that. Unfortunately we've got a government that has used patients as political pawns.

"The whole time that our funding has been going up, their results have been getting worse.

"They are doing less with more and it cannot continue."

The hospitals, meanwhile, warn it will take time to rebook elective surgeries and open beds that closed as a result of the funding cuts.

The chief executive of the Victorian Hospitals' Industrial Association, Alec Djoneff, says it is a messy situation for hospitals.

"If they've lost staff as a consequence, the replacement of that staff doesn't happen overnight. It can take some considerable time," he said.

"Hospitals will look at all the planning that they've done and the measures they've implemented and see which of those can be reversed as quickly as possible."