IWe will be in Melbourne for 3-4 days in early March. Are there any great places to see wildlife in natural settings nearby-kangaroos, cockatoos, exotic birds, koalas, etc?

Your best bet is probably Healesville Sanctuary. Here's the link to their website http://www.zoo.org.au/visiting.cfm?zoo_id=2
Enjoy your time in Melbourne.

Lots of possums in the Treasury Gardens in Spring Street - take some apples and they will eat out of your hand.
Melbourne Zoo has a good collection of Australian and overseas animals and it's only about 15 minutes from the CBD by tram.

Thanks for the responses. I was really hoping to find a natural setting rather than a zoo. Sounds like the Sanctuary might be the best bet.

Hi Boose,
Last time I was in Melbourne (about 6 years ago) the Zoo was pretty natural-like, and a worthwhile visit. It is believed to be the 11th oldest Zoo in the world.
I would also endorse Healesville as an excellent place to go. They had a special platypus display which was fascinating. Despite much searching for them in the wild this is the only time I have seen them alive.

There is also the Werribee Open Range Zoo if you want to experience African animals!