Shaking up Melbourne's inner-city public housing estates by combining them with new private housing and businesses makes sense, Premier Ted Baillieu says.

While the premier would not comment on details of a draft proposal being considered by the government which would reportedly see existing estate towers in North Richmond and Fitzroy knocked down, he says mixing public and private developments would be good for the community.

"I think everybody supports the notion of having an additional mix when it comes to public housing, including private housing (and) including some retail so we get that extra sense of activation, extra sense of community and extra sense of security in the public housing developments," he told reporters in Melbourne on Monday.

"It's public land, so we want to make sure public land is used to the best possible public benefit."

New estates would be developed in partnership with private enterprise, and the state government has received $175.3 million to build 547 homes on the Fitzroy, Prahran and North Richmond estates through the federal government's Housing Affordability Fund, Fairfax reports.

Mr Baillieu says any proceeds from such a partnership would be reinvested in public housing.

A departmental brief is due to be endorsed by Housing Minister Wendy Lovell by January 21, the report says.