Victoria's Health Minister says Federal funding cuts could force the state's hospitals to close wards and could lead to job losses.
The Commonwealth is cutting Victorian hospital funding by $107 million this financial year, because it says there has been a drop in the state's population.
But Health Minister David Davis says the population calculations are wrong and the Federal Government should reverse its decision.
"We've sought to have this raised at treasury level and the Victorian Treasurer has prosecuted the case very strongly with the Federal Treasurer and treasury officials," he said.
"The fact is there's no justification for this extraordinary and unprecedented cut."
But the acting Federal Health Minister Kate Ellis says overall, Commonwealth funding has increased for Victorian hospitals.
"The recent Commonwealth budget update confirms that health funding in Victoria will increase by 26 per cent over the next four years by the Commonwealth Government," she said.
"This is despite the fact that the Victorian State Government have made their own savage budget cuts and ripped services out."
Lisa Fitzpatrick, from the Australian Nursing Federation, is calling on both levels of government to stop blaming each other and find a solution.
She has written to the auditors-general asking them to find out where the truth lies in the funding blame game.
"What we're asking is for the Federal Government and the State Government to sit down, contribute 50 per cent each of that $107 million that's gone missing since December this financial year, as an interim measure to stop beds and theatres closing around the state," she said.