Tracey Trotter and her daughter Courtney, 12, from Cann River in east Gippsland, described the proposed unit as a "lifeline".

They have been going to Monash Children's for most of Courtney's life. Courtney is now awaiting a kidney transplant.

Mrs Trotter said spending so much time in hospital took a toll on the whole family.

"It will be fantastic just to have somewhere to go to relax that's more comfortable but still close by.

"I'm sure it will be a lifeline for many parents."

Situated next to the children's paediatric ward, the refuge will provide families and carers of children in the paediatric, oncology, intensive care and newborn services wards with a kitchen, shower, laundry, library and lounge room.

An initiative of Ronald McDonald House Monash and Southern Health, it will be known as the Ronald McDonald Family Room.

RMHM executive officer Jennifer North said life for families with a seriously ill child was "anything but normal".

"Daily routines quickly become a thing of the past.

"Food and sleep are snatched at odd times.

"Family relationships can become strained; and worry is a constant companion.

"In these times of crisis, this comfortable family refuge will provide some respite and normality for such families."

Health Minister Daniel Andrews, who was at the launch of plans for the family refuge unit on Wednesday, said the state government had pledged $250,000 towards the unit's $750,000 public capital building fund. Construction will begin later this year.