The corridor will be the subject of a top-level, $8 million business case assessment as part of a wider federal government $40 million investment.

Albury-Wodonga to Melbourne is one of five additional lines earmarked for business case studies with three already under way including one between Shepparton and Melbourne.

The 20-year plan is being driven by the Morrison government which wants to relieve population pressure on capital cities and support large regional centres like Albury-Wodonga.

"This is all part of our plan to manage population growth announced this week to take the pressure off our big cities like Melbourne and make our regional cities like Albury-Wodonga even more attractive places," Prime Minister Scott Morrison said.

"As our population grows, fast rail networks are crucial to easing the congestion pressures in our cities and shaping Australia's future."

The Albury-Melbourne line will be the subject of a $235 million upgrade beginning this year aimed at improving reliability for passenger and freight services.

Regional services minister Bridget McKenzie said the government understood the need for strategic infrastructure investment to help grow regional areas like Albury-Wodonga.

"With the announcement of the Albury-Wodonga Regional Deal yesterday (on Wednesday), it is an exciting time for the twin cities," Senator McKenzie said.

"A fast rail connection will be catalytic for the region, as evidenced in other international regional capitals.

"This is enabling infrastructure that would connect Albury-Wodonga to the rest of the nation and globe."