Melbourne has secured the hosting rights to the Australian Formula One Grand Prix until 2023, the Victoria state government announced on Sunday.

Melbourne last year signed an agreement to continue hosting the race until 2020 and Victoria Premier Daniel Andrews said the state government had agreed to a three-year extension to 2023.

"There's nothing quite like the Australian Grand Prix in Melbourne and the buzz it creates around our state," Andrew said in a statement.

Melbourne has hosted the Australian Grand Prix since 1996, when the race was switched from Adelaide but it has became a local political issue after years of heavy financial losses, subsidised by taxpayers.

Formula One supremo Bernie Ecclestone has in the past suggested the race was one of the least viable on the sport's calendar because of the time difference with the key European television market.

Despite posting record losses amid soaring costs and declining revenue, Melbourne has retained its place as the opening race on the calendar.

"We are very happy to extend our relationship with Melbourne," Ecclestone was quoted as saying in the statement.