The Victorian Government has found a way out of the controversial East West Link project, for the low cost of a few hundred million dollars.

Premier Daniel Andrews has negotiated the scrapping of the contracts for the big road build, with an agreement that awards $339 million for costs incurred since contracts were signed by the former government last year.

Mr Andrews has also pledged to set up an independent body to oversee infrastructure projects.

The planning and cost/benefit analyses for the East West Link remained shrouded in secrecy until the Government that arranged them was voted out.

Andrews has been decimated by conservative media outlets for scrapping the project, but many consider that despite the cost, a bullet has been dodged.

Andrews will now campaign the Federal Government for permission to use billions of dollars promised for the East West Link on public transport enhancements.

The Premier is expected to speak to the Prime Minister at a COAG meeting in Canberra this week.

Meanwhile, Prime Minister Tony Abbott has put out a press release describing his dismay at Victoria’s decision.

“There is no alternative to the East West Link in Victoria,” Mr Abbott’s statement said.

“The unprecedented announcement that the Victorian Government would rather pay hundreds of millions to a consortium than build the East West Link is a massive set back to Victoria.

“The Victorian Government’s decision to abrogate contractual responsibilities sets a dangerous precedent for future projects and threatens further investment in much-needed infrastructure in our country.

“They have damaged investor confidence in major infrastructure projects.”

Business groups have urged the Victorian Government to find a new major infrastructure project as quickly as possible.

A senior economist from the Victorian Employers Chamber of Commerce and Industry (VECCI) - a strong supporter of the East West Link project – said the Government must find something to build.

“It's particularly important for Victoria that we do continue to implement substantial infrastructure projects,” he said.

“Not only to create jobs, but reduce congestion on Victoria's roads and support industry in getting goods to market on time and at low cost."

Mr Wojkiw said Victoria needs a new approach to major infrastructure projects.

“We certainly need to take the politics out of infrastructure in Victoria,” he said.

“We need to take a longer term approach to capital works beyond election cycles.

“Key to that process is not only a broad and strong consensus on Victoria's infrastructure priorities, but clarity confidence and certainty for the private sector.”