THE State Government and North Melbourne Football Club are on a collision course with the AFL over plans to play matches in Ballarat.

Premier John Brumby trumpeted a $1 million upgrade of Ballarat's Eureka Stadium as the first step towards playing AFL matches there by 2013, the Herald Sun reports.

An AFL spokesman said it had no intention to move matches from Etihad Stadium or the MCG.

But AFL clubs have raised concerns about an increase in poorly attended and unprofitable games at major stadiums with two new interstate teams joining the competition.

The stadium upgrade is part of the State Government's $630 million "Ready for Tomorrow" blueprint for regional and rural Victoria, aimed at directing population growth away from Melbourne.

The plan tips the rural population to grow from 1.45 million to two million by 2048.

Premier John Brumby said the plan to improve education infrastructure, provide more buses and upgrade rail links was the best way to breathe life into regional Victoria.

"The package that I've announced ... is the biggest single commitment that we've ever made to a regional blueprint," he said.

The centrepiece is increasing the number of Victorians aged 25-34 with a university degree living in regional Victoria by 10 per cent over the next 15 years.

North Melbourne chief Eugene Arocca said the club aimed to host home-and-away matches at Eureka within five years.

He said $1 million was a good "first step" but it would take $100 million to build a 15,000-seat boutique stadium.

"By 2013 we should at least have the plans in place for this sort of a stadium but it would take both federal and state government support and money," he said.

St Kilda and the Western Bulldogs are also believed to be open to the idea of playing interstate teams away from Etihad Stadium.

Ballarat Mayor Judy Verlin said it was another "small step" in bringing AFL matches to Ballarat.

Read more on the Herald Sun.