The future of Melbourne's thriving arts and entertainment precinct is more secure, thanks to mandatory height controls approved by Planning Minister Matthew Guy.

Mr Guy has approved City of Melbourne planning scheme amendment C171 that allows areas of Southbank to be included within the Capital City Zone and reinforces the protection of its future streetscape.

"This amendment highlights the significance of our city's much loved arts precinct by setting a 24 metre mandatory height limit around Hamer Hall, the Spire, the Arts Centre and adjoining area," Mr Guy said.

"The streetscape and built form controls are a sensible approach that will enable the area to thrive and achieve the right balance for this growing precinct."

There will continue to be mandatory height controls for the Dodd Street residential area that will transfer to a mixed-use zone, to protect the low scale nature of the area.

Mr Guy said Southbank was a natural extension of the CBD and included a number of high-quality public and private buildings which made a wider contribution to the whole of Southbank, such as Eureka, Freshwater Place, Australian Centre for Contemporary Art, Southbank Boulevard and Queensbridge Plaza.

The decision follows a public exhibition of the amendment and an extensive process of evaluation by an independent panel. Mr Guy considered the panel report and the City of Melbourne's response to the panel report.

The City of Melbourne-initiated amendment is supported by extensive strategic work on the Southbank Structure Plan 2010 which is guiding Southbank's future development so that it can become a lively, accessible, liveable and sustainable neighbourhood.

The amendment introduces design controls to encourage active streetlife and to manage the interface with traffic. Car parking spaces provided will strike a balance between encouraging walking, cycling and public transport use and catering for residential and commercial needs.

"In a rapidly evolving area like Southbank it is critical that we plan to protect the quality and street life of the area by providing more services and more public spaces while being sympathetic to the neighbourhood," Mr Guy said.