After hearing about the treatment the 27-year-old inmate had received, a senior magistrate said he would refer the matter to the Attorney-General.

Deputy Chief Magistrate Brian Barrow told the prisoner she would be understandably terrified to return to the prison.

In rejecting an application for the suppression of the case, Mr Barrow said: "The issues raised here are too important not to receive publicity."

Mr Barrow, however, did suppress her identity.

Melbourne Magistrates' Court had been told the prisoner, who is facing 11 armed robbery-related charges, yesterday applied for bail because she was now in fear of her life.

The court heard the prisoner, who was born male, has had hormone treatment and plastic surgery.

It is alleged she was raped at the prison last Friday.

She had been arrested on June 29 and transferred to the prison from the Custody Centre on July 2.

The magistrate who initially heard the case noted on her remand form that she was to be kept apart from male prisoners.

Her counsel, Melinda Walker, yesterday told the court her client had reported the rape incident and it was being investigated by police.

Ms Walker said her client's safety was at grave risk because she reported the rape. "(She) was told by the perpetrators that if she did reveal the names of any of the perpetrators she would be found dead," she said.

Mr Barrow indicated he would not release the prisoner back into the community.

The application hearing was expected to continue.