Speaking to hundreds of students and teachers this morning, Polwarth MP Terry Mulder announced the government would commit $5.2 million to demolish and replace aging classrooms in the coming state budget.

"There are buildings here that have to be demolished and moved away. It's been a long campaign but it's been delivered in our first term of government," Mr Mulder said.

"It's a great outcome, but it was needed."

The announcement comes less than a year after WorkSafe investigators closed the school following the discovery of asbestos.

An emotional Timboon P-12 School principal Rosalie Moorfield said it had been a tireless campaign by the community.

"This is just such a significant day for our school community. It's been a lot of hard work and a lot of years trying to present a case for a rebuild. $5.2 million today is just going to make such a huge difference to our school environment," Ms Moorfield said.

"Most of our primary students will be in new classrooms, it means significant new buildings for our secondary students as well.

"It just brings our school up to 21st century learning."

s.mccomish@fairfaxmedia.com.au