The City of Melbourne and the neighbouring Yarra Council are expected to vote next month on cutting CBD and residential speed limits to 30km/h.
Both councils are consulting with road safety groups and the wider community. The argument is that lower speeds can potentially significantly reduce road accidents.
Speaking with News Ltd this week, Melbourne Lord Mayor Robert Doyle said the plan had been driven by the city's high number of road accidents - the highest in the state.
"The difference in time of travelling between 40km/h and 30km/h through the city would be minuscule, but the big differential is the ability to react and brake if there is a problem," Mr Doyle told the Herald Sun.
Mr Doyle conceded that pedestrians ignoring lights at intersections are a major contributing factor to accidents in the CBD.
The proposal has garnered support from road and pedestrian safety groups, along with Monash University's Accident Research Centre (MUARC) and the Transport Accident Commission (TAC).
Research at MUARC has shown that reducing speed limits from 50km/h to 30km/h could reduce the risk of road fatalities by as much as 90 percent.
"Reducing travelling speeds is the most effective and cost-effective measure we can take," MUARC's Dr Bruce Corben told the Herald Sun.
This latest push for reduced speed limits is not the first time changes have been proposed, with a Green's plan last year outlining a 30km/h limit in Melbourne's inner suburbs.
RACV public policy manager Brian Negus said last year that the organisation supported 40km/h limits, but that any plan to cut the limit by 10km/h would struggle to gain traction with motorists.
"Our concern would be that anything slower than 40 would lack credibility with the public," he said. "Already we see the adherence to 40km/h is a bit patchy."