Labor Member for Western Victoria Gayle Tierney announced on Thursday the Victorian government would chip in the funding towards the $969,581 project.

The news comes just days after councillors voted on Monday to award a $751,330 contract to start work on the roof as part of a wider upgrade.

Saleyards superintendent Paul White, who has worked there for 22 years, welcomed the news and said it had been 10 years in the making.

Mr White said weather permitting, he hoped work could start in September and be finished by Christmas. "It'll be the best Christmas present I've had in 22 years," he said.

Ms Tierney said the Warrnambool exchange generated about $34.1 million each year for the regional economy and was the largest stock selling centre in the south-west.

She said the government was committed to ensuring Warrnambool businesses had the support they need to expand and thrive.

"It's fantastic to see initiatives like the one at South West Victorian Livestock Exchange that show why our regions are national standard bearers when it comes to livestock exchange and processing," she said,

The rest of the funding for the project will come from the $540,000 the council had set aside in last year's capital works budget.

Just over $72,000 was spent last year on detailed design works, and another $100,000 will go towards power and water retention and reuse, while $46,171 has been set aside for project contingency.

The project was initially expected to cost $1.1 million and that council had flagged the need to borrow up to $700,000.

Cr Kylie Gaston said the project was a fine way to mark the 50th anniversary of the saleyards.

"It's a credit to the management and the agents that the saleyards have continued to perform so well, particularly in the last financial year, quite outstanding," she said.

"This is a vote of confidence in their hard work and continuing success."

Cr Gaston said it was also an important improvement for animal welfare during both the cold, muddy winters and hot days.

She said the project almost didn't happen due to impacts of COVID-19 on the budget, but the council had decided collectively to keep it in.

Cr Robert Anderson said the new building would be a great support for the industry.

In noting that council had formally resolved to continue operating the saleyards into the future, Cr Peter Sycopoulis said that in his previous term on council there were "forces from within" who appeared determined to relinquish, arguably, one of the only profit making operations of council.

He said he was confident back then, even with the Mortlake facility in the pipeline, of the future success of the Warrnambool saleyards.

Citing the council agenda, Cr Sycopoulis said, the saleyards' performance had been outstanding in 2019-2020, exceeding budgets and improved forecasts year-to-date.

Cr Mike Neoh said the saleyards were a long way behind the peak glory days, and he hoped the roof would restore that.

Cr David Owen said the new roof would be wonderful, including from an animal welfare point of view. "If you've been out there when it is hot or raining, you do wonder," he said.

Cr Sue Cassidy said she was hopeful that by next year the new roof would be on.

Mayor Tony Herbert said it was an exciting year for the business and imagined it was only stage one of a number of upgrades to come.

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