Every physical machine in today's typical datacenter is backed by storage devices with hundreds of Gigabytes to Terabytes in size. Data center vendors usually use hard disk drives for their back-end storage as it is cheap and reliable. However, the increase in the I/O accesses to the back-end storage from one or many of the VMs hosted on a physical machine can reduce its overall accesses time significantly due to contention. This may not be suitable for interactive applications requiring low latency that might be co-located with other I/O intensive applications. In this paper we present Multi-Cache, a multi-layer cache management system that uses a combination of cache devices of varied speed and cost such as solid state drives, non-volatile memories, etc to mitigate this problem. Multi-Cache partitions each device dynamically at runtime according to the workload of each VM and its priority. We use a heuristic optimization technique that ensures maximum utilization of the caches resulting in a high hit rate. We use a weighted partitioning policy that improves latency by up to 72% for individual workloads, and a overall hit rate increase of up to 31% for host running several workloads together in comparison to standard LRU caching algorithms.