Member for Wannon Dan Tehan said on Thursday the funding will be used to provide further safety upgrades, passing lanes and duplication works consistent with the Princes Highway corridor strategy.

"Over 14,000 vehicles a day use the Princes Highway between Warrnambool and Port Fairy and we want to ensure the road is upgraded to manage the ever increasing traffic flows," Mr Tehan said.

"This is a new commitment. It's on top of the $80 million already committed under the Roads of Strategic Importance initiative, through which we will be supporting targeted improvements to the Princes and Henty highways, Portland-Casterton Road and Portland-Nelson Road."

He called on the state government to match the funding or at least provide a further 20 per cent.

"Safety on our roads is the number one priority issue here in the south-west," he said.

"We need to get working on upgrading our roads immediately. When it comes to this $60 million we have the Princes Highway corridor strategy, which will be released in the middle of the year. A soon as the projects are identified, work can begin. If areas are identified for duplication then the money can be used for that."

He said this year's Federal Budget earmarked $300 million for Victoria for upgrades to the Princes Highway.

Warrnambool City Council mayor Tony Herbert said it was "fantastic news".

"This is a significantly busy road," he said.

"It's the busiest outside Geelong. From a safety perspective it's vital this upgrade is done, but also from a productivity perspective as well. We are punching well above our weight from a regional perspective about contributing to the whole economy of Victoria. For us to grow and continue to get our product to Melbourne, this corridor is vital."

He said the Princes Highway West Action Alliance's lobbying had been "incredibly successful".

"It's an amazing start and I implore the state government to match it."

Moyne Shire Council mayor Mick Wolfe said upgrades had "always been a priority" for the 11 years he had been on council.

He said the south-west produced a quarter of the nation's milk supply, and it had to be moved on adequate roads.

The Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack, said that with the Princes Highway crossing three states, it provides an important link between regional communities and allows freight to be moved from key agricultural areas to major cities and ports.

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"The Morrison Government has committed $1 billion to deliver improvements along the whole length of the Princes Highway, but it is identifying the local priorities to improve safety, reduce travel times and support local industry and tourism that actually make a difference," Mr McCormack said.

Mr Tehan acknowledged the strong advocacy of local councils in identifying their priorities and in urging all governments to play their part in upgrading our local roads.

"The community has made it loud and clear they want more done to improve our local roads. Given that the Morrison Government has now provided this additional money I again call on the Andrews Government to partner with us on this important set of upgrades," Mr Tehan said.

He said said investing in regional roads has been a key focus of the Morrison Government and builds the government's support for local roads through the $2.2 billion Local and State Government Road Safety Package to help address accident black spots and local road and bridge upgrades.

This includes a 25 per cent increase in the Roads to Recovery allocations for local councils to maintain the roads they are responsible for, bringing annual Roads to Recovery payments to $500 million across the nation.

"This investment is possible because the Morrison Government has an economic plan to build our economy, secure our future and keep the Budget strong so we can keep making these kinds of investments," Mr McCormack said.

South West Coast MP Roma Britnell welcomed the funding.

"The upgrade of the Princes Highway has been a key focus for our community for many years," she said.

"I am so pleased to see this funding delivered, I've advocated strongly with Dan and the state Labor government and I'm delighted that Dan has listened and delivered.

The section of highway between Warrnambool and Port Fairy is increasingly busy and it's important that it is safe for motorists and is able to help freight move efficiently and effectively. We are heading in the right direction, but it is time the state Labor government pulled their finger out, took responsibility for their own assets and delivered appropriate funding. It's shameful Daniel Andrews has so far ignored this major concern for our community and left it up to the federal Liberal government to act."

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