Politicians are playing a multi-billion dollar game of chicken in Victoria.

Prime Minister Tony Abbott has warned that the state will owe $3 billion to the Commonwealth if Melbourne's East West Link (EWL) toll road does not go ahead.

The PM has stepped into the fight that divides the far south east, attending while Premier Denis Napthine signed contracts for the first stage of the road at the project office this morning.

Labor says it will ditch the $6.8 billion road plan if it wins the election in November, claiming that the contracts are invalid due to of ongoing court action from two local councils.

Melbourne’s Moreland and Yarra councils are waging a Supreme Court battle to see the business case for the build, which has not been made public despite repeated calls.

The local governments won an early victory in recent week, forcing Planning Minister Matthew Guy to disclose to the councils the documents that he considered before giving approval for the project.

The Commonwealth has committed $1.5 billion for each of the two stages of the project, and Tony Abbott says if Labor bails on the plan then he will want the money back.

“If contracts are torn up against all principle, against all precedent and East West Link doesn't go ahead, that money goes back to Canberra,” Mr Abbott said at the contract-signing today.

He said the money could not e spent on trains instead.

“We made it very clear pre-election that we thought the role of the Commonwealth Government is national freight, national roads, roads of national significance,” he said.

“The urban rail systems are owned and operated by the State Governments and we think they should be funded by state governments and we've made that very clear all along.”

The Victorian Labor Party says it will “fight for the infrastructure priorities Victorians vote for.”