An additional $40 million has been allocated to the Shipwreck Coast Master Plan and the project, which has been 15 years in the making and is set to come to fruition.

Timboon Railway Shed Distillery marketing manager Tim Mitchell said staff and town residents were celebrating after the announcement.

"We're very excited," Mr Mitchell said.

"The potential is huge to get people onto the trail and connect Timboon to Port Campbell."

Timboon Fine Ice Cream owner Tim Marwood she he was rapt the trail would go ahead.

"We're very pleased here in Timboon," he said.

Mr Marwood said the town was becoming a popular destination. "Timboon is already becoming a tourism destination in its own right," he said.

"It's really pleasing to see we will finally be getting some resources."

Mr Marwood said the trail would open up the potential for more businesses in the town, particularly accommodation providers. "It's good for the whole region," he said.

"It's a great win for everybody."

The additional funding was announced as part of the $355 million Geelong City Deal.

Victorian Premier Andrew Daniels said the deal would transform Geelong and the Shipwreck Coast.

The multi-million dollar tourism trail would help ease Great Ocean Road congestion and encourage visitors to stay longer.  The trail would extend the existing Camperdown-Timboon Rail Trail to Port Campbell.

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