The crisis, sparked by restrictions China placed on its importation of recyclable materials this year, has seen councils and contractors facing ballooning costs and the expensive prospect of putting kerbside recycling into landfill.

The offer will assist councils until June 30 this year, after which they must meet any cost increases.

The government will also establish a taskforce to help the recycling industry transition in the medium to long-term.

Environment Minister Lily D’Ambrosio said the package was to protect jobs and ensure Victorians maintained confidence to continue recycling.

“While recycling is ultimately a matter for local councils, we’re stepping in to help councils and industry affected by China’s new import rules,” she said.

Warrnambool City Council CEO Bruce Anson said he welcomed the announcement despite uncertainties remaining.

“The assistance will get us through this financial year,” he said. “The establishment of the taskforce is a welcome move – probably overdue – but a welcome move.”

Corangamite Shire mayor Jo Beard said the package was “not good enough”.

“We needed an announcement like this when this first happened a couple of weeks ago,” she said.

Moyne Shire did not respond by deadline.