The government has agreed to have a consortium of manufacturing companies and engineering firms produce the invasive ventilators.

Victorian company Grey Innovation will take the lead on the $31.3 million agreement.

"This is another great example of Australian industry and the private sector working with our government to ensure critical supply of medical equipment during the outbreak of this virus," federal Industry Minister Karen Andrews said on Thursday.

The deal aims to ensure there is an adequate supply of lifesaving ventilators during the coronavirus crisis.

"Victoria has the highest concentration of leading engineering and manufacturing companies in Australia ... we are well placed to work together to build the Notus emergency invasive ventilators as quickly as possible," Grey Innovation executive chair Jefferson Harcourt said.

The agreement is on top of a $500,000 Victorian government grant to the company to secure a licensing deal for production of the devices.

The supply of ventilators is set to start in June, with the 2000 machines expected to be produced by the end of July.

There are about 1000 ventilators in Victoria.

The Victorian government is also helping Ballarat-based Gekko Systems produce ventilators as part of a $1.3 billion procurement drive for medical equipment and supplies.

Australian Associated Press