it depends, do you want to stay close to the city? There are some resonable hostels and motels on the out skirts of the city.
Check ou the http://www.novotelmelbourne.com.au/ and the
http://www.ibishotel.com/hotel-directory/gb/australia-pacific/australia/melbourne/melbourne-hotel.htm almost 5 years ago
Nomads Melbourne is awesome - http://www.nomadshostels.com/hostels/australia/melbourne-nomads-backpackers
Top notch backpacking :) almost 5 years ago