The tax will now be paid by developers rather than landowners when they sell their land.

Planning Minister Justin Madden on Friday released draft legislation on the tax, known as the Growth Areas Infrastructure Contribution (GAIC), which will be used for infrastructure such as roads, schools, parks and public transport in new suburbs.

Landowners whose land was inside the 41,000-hectare expansion to Melbourne's urban boundary had said their land would not increase in value when it was rezoned, and the GAIC would ruin them.

After months of pressure, including a protest on the steps on Parliament in June, Mr Madden said last week the tax would "apply to those who profit from subdividing and developing land brought into the urban growth boundary".

Mr Madden said the Government would write to landowners offering them a chance to discuss the proposal and how it affected them.

Michael Hocking, a spokesman for Taxed Out, a group formed to fight the proposed tax, said sellers would still see a reduction in their property's value under the revised tax.

"I don't see anything has changed because it's the same transaction that the Government's targeting. Under this scenario, small acreage may suffer a loss in market value as there is a liability to the purchaser that must be considered when negotiating the purchase."

The State Government says 284,000 homes need to be built in growth areas to cater for population growth.

The final boundary will be presented to Parliament later this year. The draft legislation is available for public comment until Monday, November 2, at 5pm.

Details: www.dpcd.vic.gov.au/planning