Olivia Newton-John's family indicates it would accept state memorial for Grease star

Mr Andrews posted a photo tribute to Olivia Newton John, saying she was "one in a million". (Facebook: Dan Andrews)

The family of Australian icon Olivia Newton-John is still in talks with the Victorian government about how the state will honour the late singer.

Newton-John, best known for her role as Sandy in the 1978 classic Grease, died on Monday, local time, at her ranch in southern California. 

She had been diagnosed with cancer. 

When asked during a press conference on Tuesday whether he would consider offering the family a state funeral, Victorian Premier Daniel Andrews said he wanted to speak with them, citing Newton-John's "amazing" contributions.

"I was honoured to meet Olivia Newton-John on many different occasions, particularly in connection with the Olivia Newton-John Cancer and Wellness Centre," Mr Andrews said. 

"An absolutely supreme talent, a person of grace, a person of such energy and vitality.

"She took her cancer journey and used that to save lives and change lives." 

On Wednesday a spokesperson for the Premier said they were still talking to the family and no formal offer of a service had been made yet.

Olivia Newton-John and John Travolta in an iconic scene from Grease. (Paramount Pictures)

Newton-John's niece Totti Goldsmith told Nine's A Current Affair program on Tuesday the family would accept an offer of a state funeral.

"I think Australia needs it," Goldsmith said. 

"She's so loved."

Goldsmith later clarified to Channel 9 that Newton-John would be laid to rest on her ranch in the US, but that the family was interested in a state memorial service.

"She'll be with her horses and her dogs and her chickens and her daughter and her husband," she said.

Landmarks turn pink for Newton-John

Buildings at Melbourne's arts centre were bathed in a pink glow in memory of Olivia Newton-John. (ABC News: Simon Tucci)

Born in the UK, Newton-John moved to the Victorian capital as a child.

The performer was a tireless campaigner for breast cancer research during her lifetime, having been diagnosed with the disease herself.

The Olivia Newton-John Cancer Wellness and Research Centre continues to operate at the Austin Hospital in Melbourne's east.

Last night, landmarks including Flinders Street Station and the Melbourne Cricket Ground turned pink in honour of Newton-John's legacy.

The star moved to Melbourne as a child. (ABC News: Joseph Dunstan)

Visit ABC iview for our Remembering Olivia Newton-John collection.