The Australian Grand Prix will remain in Melbourne for another five years after a deal was reached to extend the rights between 2016 to 2020.

Albert Park has hosted the Australian Grand Prix every year since 1996 when it switched from Adelaide and has established itself as a firm favourite amongst drivers and fans.

The new deal, which comes after more than twelve months of negotiation, will see the race remain in Australia's second largest city - often regarded as its sporting capital -, taking it up to 2020.

Keen to capitalise on the success of Australia's own Daniel Ricciardo, who celebrated his second F1 win in Hungary last week, Premeir of Victoria Denis Napthine is hopeful that it continue to entice large crowds and TV audiences.

"Within this contract we hope to see Australia's own Daniel Ricciardo win the Formula 1(R)Australian Grand Prix and become World Champion."

"Formula 1 is a key pillar of Victoria's major sporting events strategy. This calendar is unrivalled worldwide, commencing with the Australian Tennis Open and Asian Football Cup in January, followed by the ICC Cricket World Cup in February, the Formula 1(R) Australian Grand Prix in March, the AFL Final Series, and the Spring Racing Carnival," Dr Napthine said.

The Australian Grand Prix has become the traditional host for the F1 curtain raiser having hosted the opening round each year since 1996, save for 2006 and 2010.

The new deal also means Albert Park will become one of the longest-serving venues on the F1 calendar.