Olivia Newton-John's niece, Tottie Goldsmith, has revealed her family would accept a state funeral, however a formal offer from the Victorian government is yet to be made.
A spokeswoman for Victoria Premier Daniel Andrews told AAP on Wednesday that "no offer or acceptance has occurred" at this time but did not rule out the possibility.
Goldsmith, an actress, appeared on Australia's A Current Affair on Tuesday night to remember the Grease star in the wake of her death and said the family would accept the offer of a state funeral.
"On behalf of not just our family, but I think Australia needs it - she's so loved. I think our country needs it, so we're going to accept it," Goldsmith said.
Meanwhile, Newton-John's only daughter, Chloe Lattanzi, shared a tribute to her late mum on Instagram.
"You are my lighthouse mama. My safe place. My heart space. It has been my honour and continues to be my honour to be your baby and best friend," she wrote.
"You are an angel on earth and everyone touched by you has been blessed. I love you forever my life giver, my teacher, my mama."
When asked on Tuesday about offering her family a state memorial, Mr Andrews said: "As for celebrating her life ... her music and film and all the other amazing contributions that she made, we would, of course, want to speak to the family and be as respectful as we can."
A number of famous Melbourne landmarks - including Flinders Street Station, the Arts Centre, the MCG and other sporting venues - were lit up in pink on Tuesday night to mark Newton-John's contribution to cancer awareness and research.
The performer, who was best known for her role alongside John Travolta in the smash movie musical Grease, endured a recurring battle with breast cancer.
Mr Andrews said her generosity saved lives and her advocacy spanning many years provided hope for others.
"She took her cancer journey and used that to save lives and change lives, and that's just a deeply impressive thing," he said.
Austin Health, home of Melbourne's Olivia Newton-John Cancer Research Centre, said in a statement it was a particularly sad day at the facility and they are planning a memorial service.
Adelaide also lit up its entertainment centre in pink lights in memory of the star, who was remembered as a friend and inspiration on Tuesday.
Travolta was among the first to pay tribute to his former co-star, while Australian music guru Molly Meldrum said her passion for life was unwavering.
"Tonight, the stars will shine a little brighter and I am heartbroken," he said.
