Melbourne's boundaries have been expanded, with 24,500 hectares of developable land being incorporated into its urban growth boundary (UGB).

The land is enough to create 134,000 new homes.

The planning scheme amendment to expand the UGB was passed through parliament yesterday and will redefine the city’s limits.

Expanding the boundary is part of the Brumby Labor Government’s long-term plan to manage Melbourne’s growth and attempt to keep house prices affordable.

The next stage of the scheme will include consultation on the growth area framework and the preparation of precinct structure plans (PSP) for Melbourne’s newest suburbs.

A total of $10 million has been allocated to prepare PSPs in Melbourne’s new growth areas.

The masterplans will provide plans for laying out parks, shopping centres, schools, housing, employment precincts, roads and connections to public transport.

The amendment protects 15,000 hectares of native grasslands in Melbourne’s west and a further 6,000 hectares of land would be zoned for rural conservation purposes.

Several council planning schemes will be amended to incorporate the changes to the UGB and include Casey, Whittlesea, Wyndham, Hume, Melton and Mitchell Shire Councils. The amendment also sets out the alignments for major transport initiatives such the Outer Metropolitan/E6 Transport corridor project and the Regional Rail Link (west of Werribee to Deer Park).