The Victoria government has agreed a new 5-year deal that will keep the Australian Grand Prix in Albert Park until 2020.

Victoria Premier Denis Napthine announced the deal today, and whilst unwilling to give details of the financial side of the agreement confirmed that the event will remain the season opener and a day time race, despite Bernie Ecclestone's desire to have the race held at night.

"This is a terrific announcement that reaffirms Melbourne and Victoria as the sporting and events capital of the world," Napthine told Melbourne's 3AW radio station. "We've secured another five-year deal for the grand prix and we've secured a great deal for the people of Victoria that's a better deal than the existing deal."

"The new deal is on the same terms as the existing contract in that it will be the first race of the season, it will be in March each year," he added.

The Grand Prix, which has been hosted by Melbourne since 1996, has been a political hot potato, not only in terms of environment concerns, including pollution, noise and disruption, but in terms of cost, the Victoria government having to subsidise it to the tune of £28m ($AUD 50.67m) in 2013 alone.

However, Napthine insists that the new deal will see the taxpayer funded subsidy reduced, and while not willing to go into details said the new deal represents better value than the old one.

"We are investing money in the Grand Prix that is returned many fold over," he said. "There is enormous competition to have Grands Prix as major events around the world. I can tell you there was a small city just up the road in another state that was very keen to get the Grand Prix."

Chris Balfe