Public drunkenness will be decriminalised in Victoria on the eve of a coronial inquest into the death of an Aboriginal woman who died in police custody.

The family of an Aboriginal woman who died in police custody say it's about time Victoria abolished public drunkenness as a crime ahead of a coronial inquest into her death.

The state government announced the decriminalisation just days ahead of the inquest into the death of Tanya Day, a mother, grandmother and Yorta Yorta woman who died while in police custody in 2017 after being picked up for being intoxicated.

Ms Day's daughter Belinda Stevens welcomed the commitment but said it shouldn't have come at the cost of her mother's life.

"It's not good enough in this day and age that Aboriginal people are targeted by such a racist law," she told ABC Melbourne radio.

"People go to the footy they have a drink and they'll get on public transport and get home, or they'll go to the races and get themselves into quite a state but they are not victims of this law.

"This is why we're glad the commitment has been made because it certainly does affect Aboriginal people more than non-Aboriginal people."

Decriminalisation was a key recommendation of the 1991 Royal Commission into Aboriginal Deaths in Custody and coroner Caitlin English had already flagged her intention to recommend the law be changed.

"Public drunkenness requires a public health response, not a criminal justice one, and now is the right time to take this important reform forward," Attorney-general Jill Hennessy said in a statement.

Ms Day, 55, boarded a train in Echuca headed to Melbourne, via Bendigo, to see her daughter in December 2017.

Last year the coroner's court was told while Ms Day was on the train she was unable to produce her ticket and police were called, with officers taking her into custody where she hit her head five times, ultimately suffering a brain haemorrhage.

The Victorian government will establish a reference group to guide the decriminalisation process, working with Victoria police, Aboriginal groups and communities.

A new health-based model will promote therapeutic and culturally appropriate ways to assist alcohol-affected people in public places.

Victoria is one of only two states left to still consider public drunkenness as a crime, the other being Queensland.