The tremor was felt at 8.55pm and measured 4.7 on the Richter Scale, according to the US Geological Survey.
It was centered 5.5km north-west of Korumburra in South Gippsland and was 8km deep.
Householders from Reservoir, in the city's north, to Kew and Cheltenham, southeast of Melbourne, said they felt the tremor - which lasted a few seconds.
A spokeswoman for Victoria Police also said there had been an earth tremor but said there were no reports of any damage immediately after the incident.
Further information and comment was being sought from Geoscience Australia, which monitors earthquake activity.
Yes. I felt it here.
There have been no reports of injury and police are urging people not to call 000 unless they have been injured or suffered property damage.
Victoria Police and the State Emergency Service also say there has been an earth tremor but said there are no reports of any damage so far.
Terry Ryan from the Bureau of Meteorology says the tremor struck just before 9:00pm (AEDT).
"At 8:55pm there was an earthquake 5.5 kilometres north-west of Korumburra, which of course is in South Gippsland," he said.
"At this stage the estimation was 8 kilometres deep."
James Sandman of Drouin, in Victoria's east, was watching TV when the tremor struck.
"We were just sitting down watching the TV and then the whole house absolutely shook," he said.
"The foundations shook, the walls moved, they wobbled, and myself and my wife just looked at each other and we were both then looked at the exits wondering 'do we need to get out?'"
Reports to ABC News Online say the suburbs of Frankston, Knoxfield, Lang Lang, Caulfield North and Yarra Junction have felt tremors.
"We just felt an earth tremor in Yarra Junction Victoria at 8.56pm (AEDT)," one reader said.
"It seemed to travel from west to east."...<cont>